Are You Paying Your Credit Cards Every Month, but the Balance Barely Decreases?
Despite making your minimum payments, interest continues to accumulate, and the situation becomes overwhelming. If you recognize yourself in this situation, you are not alone, and most importantly, legal solutions exist before reaching bankruptcy.
The goal of this article is to help you recognize the signs of over-indebtedness and discover realistic options for regaining control of your credit card debt.
Why Does Credit Card Debt Become Unmanageable?
Credit cards are convenient, but they can quickly become a financial trap.
High Interest Rates: Credit cards often feature rates between 19% and 29%. At this level, a large portion of your payments goes solely toward paying interest.
The Snowball Effect Despite Payments: Even when paying every month, the balance decreases very slowly. One unexpected event is all it takes to fall back in.
Multiple Cards: Too many credit cards make the total debt difficult to track. To better understand this cycle, consult: Credit Cards and Debt: How to Avoid the Financial Downward Spiral.
Signs That It’s Becoming Impossible to Manage Alone
Certain situations serve as major red flags:
You pay only the required minimum payment each month.
Late payments are becoming frequent.
You pay one card with another or use a line of credit to cover minimum payments.
Financial stress is constant (lack of sleep, anxiety, family tension).
If several of these points apply to you, it is time to explore structured solutions.
What Options Exist When Repayment Seems Impossible?
Continuing to Pay the Minimum: Why It Is Often Unviable
Paying the minimum may feel like “meeting your obligations,” but in reality, it prolongs debt for years or decades with an enormous total cost.
Debt Consolidation
Consolidation can reduce interest rates by grouping your debts into a single payment. However, this solution has significant limits:
It often requires a good credit record.
It sometimes increases the repayment duration.
It does not reduce the total amount of debt.
The Consumer Proposal
This is a legal solution governed by the Bankruptcy and Insolvency Act (federal government) that is often misunderstood but very effective for credit card debt.
Negotiation: A Licensed Insolvency Trustee negotiates with your creditors.
Reduction: You repay only a portion of your debts.
Fixed Payment: Monthly payments are reduced and predictable.
Freeze: Interest and legal actions against you are suspended.
Bankruptcy (As a Last Resort)
Bankruptcy allows for the discharge of certain debts, but it has heavier financial and psychological consequences. It is generally considered only when other options are not viable.
Why the Consumer Proposal Is Often the Best Solution for Credit Card Debt
Credit card debts are unsecured, making them highly suitable for this solution.
It allows you to avoid bankruptcy.
The impact on your financial situation is regulated and predictable.
It offers a real way out, not just temporary relief.
When to Consult a Licensed Insolvency Trustee (LIT)?
Consulting a trustee does not commit you to anything, and the first consultation is free. You will receive a personalized analysis with no obligation to file.
FAQ – Credit Card Debt
Do I have to repay all the money I borrowed? No. With a consumer proposal, you often repay only a portion of the total balance.
Can I include multiple cards in a proposal? Yes. All your credit cards can be grouped into a single proposal.
What happens if I stop paying my cards? Interest continues, collection calls begin, and legal actions are possible. It is better to act before reaching this point.
Does a consumer proposal stop creditor calls? Yes. Upon filing, creditors must stop calls and collection efforts.
Act Before the Situation Worsens
If you are struggling to pay more than the minimum (or can no longer make payments at all), this is not a personal failure. It is often the result of a costly credit system. A free meeting with our Licensed Insolvency Trustee can help you evaluate your options and regain stability.
Book Your Free Consultation!
To learn more about the consumer proposal, book a free consultation now (by phone, video call, or in person). GOBEIL GROUPE CONSEIL advisors serve all cities in Quebec.
