Hidden debt could be costing you more than you think

Article content

Whatever the circumstances, keeping debt hidden often means waiting longer to deal with it, and that delay can become extremely costly. On a $30,000 credit card balance at 21 per cent interest, making only the minimum payments can keep someone in debt for decades and add tens of thousands of dollars in interest.

Article content

The conversation most people keep putting off

Article content

For many people, the hardest part of dealing with debt is not the numbers themselves but the fear of how others might respond. Worry about disappointing a spouse, family member or friend can keep the conversation pushed aside for far too long. However, partners who discover debt through a conversation are far more likely to focus on finding a solution than those who discover it through a mortgage application or a collection notice.

Article content

An initial conversation does not need to resolve everything at once. It only needs to open the door. A calm setting, honest numbers and a clear signal that the goal is to solve the problem together rather than assign blame goes a long way. Some couples find it useful to agree in advance to a single, time-limited conversation with a specific goal, such as listing every account with each balance, rather than trying to address everything at once.

Article content

Article content

When the conversation feels impossible, a non-profit credit counsellor can provide a neutral starting point. A free, confidential appointment gives both people the same factual picture of the situation, which often makes the emotional conversation that follows much easier.

Article content

Options are more accessible than most people assume

Article content

One of the most common misconceptions about asking for debt help is that it only becomes relevant once you have hit rock bottom. In truth, reaching out early normally expands the range of available options and makes finding a resolution easier.

Article content

For households with unsecured debt and income that covers essentials, a debt management program through a non-profit credit counselling agency is often the most practical starting point. It consolidates payments, reduces or eliminates interest charges and does not require taking on additional credit.

Article content

Debt settlement is another option, negotiated directly with creditors, though it requires a lump sum of money up front and is not the right fit for every situation.

Article content

Article content

Article content

For those whose situation is serious but still manageable, a consolidation loan or mortgage refinance may reduce the cost of carrying the debt, provided the habits that created it are also addressed.

Article content

Why waiting makes everything harder

Article content

Many people delay dealing with debt because it never quite feels urgent enough. There is always a plan to catch up next month, a bonus on the horizon or a balance transfer that might buy more time. The longer that pattern continues, the more drastic the consequences typically are.

Article content

Article content

Mary Castillo is a Saskatoon-based credit counsellor at Credit Counselling Society, a non-profit organization that has helped Canadians manage debt since 1996.

Article content

Article content