Dealing with Debt

Dealing with debt is an important matter. When you borrow money from a lender, they expect that you will live up to the terms of the agreement and that you will pay as agreed. Just as you have rights as a borrower to be treated fairly when dealing with creditors, creditors also have rights in the money they have lent you. If debts are left unpaid long enough, in some cases, the creditor may have the right to seize your property or you may find yourself in court.  

Before using credit it is important to understand what you are signing up for and how much the credit will cost. Within New Brunswick, lenders are required by law (Cost of Credit Disclosure Act) to clearly disclose the true cost of borrowing as well as your rights and responsibilities in their credit contracts. Here are some things consider before signing on the dotted line.


What You Need to Know


Credit is an agreement that you make with a lender.  It allows you to obtain goods or services now, and you agree to pay the lender back, usually with interest, in the future.  Credit comes in many different forms such as personal loans, lines of credit, mortgages, credit cards and leases. Being a responsible borrower can help you to build a good credit history, making you more attractive to lenders and giving you the ability to negotiate lower interest rates.

Using credit irresponsibly and spending beyond your means can have the opposite effect. Lenders are hesitant to lend to individuals with poor credit history and will most likely charge them higher interest rates.



Understand What it Costs

Just because you are approved for a loan or credit product does not mean you will be able to afford the payments.  Understand all costs (fees, interest rate, and other charges) and be sure that they fit your budget. Visit Cost of Credit to learn about the true cost of borrowing.



Understand What You are Agreeing to

Once you sign on the dotted line you have entered into a legal contract.  Be sure you know exactly what you are agreeing to and that you are familiar with your rights and obligations under the credit contract. Visit Credit Contracts to learn about your rights and responsibilities.



Understand what happens if you cannot make payments
If a consumer owes money to a company and is not paying or is unable to make the minimum payment, the company may hand the debt over to a collections agency. When this happens, a creditor has the right to collect on a debt that is owed to them, and the consumer has the right to be treated reasonably and with respect. Visit Collection Agencies to understand your rights and what the agency is allowed and is not allowed to do.

 

Understand how to protect yourselfThe best way to recognize and avoid a scam is to familiarize yourself with the tactics and schemes scam artists use. Protecting Your Credit provides tips on how to be a responsible borrower and how to avoid unscrupulous credit companies.


Have a plan to pay off the credit before you use it

Our resources, tips and worksheets can help you make smart spending decisions, build a budget that works, and avoid living beyond your means. You can also contact a credit counselling service for additional help and information about your options when dealing with and managing debt. 


 

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