Managing Debt: What You Can Do

Some Nova Scotians are ringing in the new year with serious financial problems.

"I max one credit card just to make a payment on another" is one remark heard.

"I don't know where the money is going to come from" is another.

These people are part of a disturbing trend around the province. More than 2,000 Nova Scotians filed for bankruptcy from January to September last year, an increase of almost two per cent over the same period in 1998.

But help is available. If you cannot expect to bring your debts in line with your income, the Department of Business and Consumer Services provides no-charge counselling. The Debtor Assistance Program offers financial advice so consumers can get spending under control. Counsellors will review your budget and determine if either the Consumer Proposal Program or the Orderly Payment of Debts Program suit your needs.

Consumer Proposal Program:

• Under this program, debtors make a proposal to their creditors offering to pay off a percentage of their debts. Payments can be in the form of a lump-sum payment, payments on a regular basis up to 60 months, or a combination of both these terms. The process is more formal than Orderly Payment of Debts Program, in that it provides for a meeting of creditors and involves the Superintendent of Bankruptcy as well as the Supreme Court.

Together with a department program administrator, a consumer under this program develops a proposal to be presented to all his/her unsecured creditors. The creditors have 45 days in which to accept or reject the proposal, during this period all creditor activity to collect on the accounts stops. If the proposal is accepted, payments to the department can be made in a lump sum or monthly basis as called for in the proposal. These funds are distributed to the creditors quarterly. Consumers with unsecured debts less than $75,000, excluding mortgages, are eligible to make a proposal. Under this option, debtors must attend two mandatory counselling sessions.

The Orderly Payment of Debts Program:

• Under the Orderly Payment of Debts Program, individuals are able to repay their bills over a maximum of five years, at an interest rate of five per cent per annum, while maintaining an adequate standard of living.

If you are registered under the program, you will make one monthly payment to the Department of Business and Consumer Services, in trust. The money will be paid to your creditors on a quarterly basis. Creditors can no longer contact you, or take legal action against you, they must deal with the department. Also, you are not permitted to get any more credit while on the program.

If you think you need the services of one of our counsellors, please call 902-424-5200, toll-free at 1-800-670-4357, or visit our website at www.gov.ns.ca/bacs . Budget worksheets, available on the website, are also helpful in determining how well you manage your finances. Managing your money wisely is the best way to avoid financial problems.

NOTE TO EDITORS: This item is part of a feature series entitled Consumer Savvy, produced by the Department of Business and Consumer Services. Today's article is the first in a series on consumer issues and deals with managing debt. The Consumer Savvy logo is available for use by print media by calling Robyn McIsaac at 902-424-2933.