CHRIS ASKED: How can I pay off my debt without damaging my good credit or touching the little RRSP I have?
ANSWER: The only way to deal with your debt and maintain a good credit rating is to pay your creditors directly, in full, with interest.
Getting a consolidation loan, assuming you can get one, does not have a negative impact on your credit rating. Consolidation loans are not easy to quality for and often the payments are not manageable.
Filing a consumer proposal may be your best option.
Filing a consumer proposal in Ontario will damage your credit rating, but it might be a better option because it will deal with all of your creditors, make your payments manageable and help you get out of debt.
Although this option will damage your credit rating you have to remember that your credit rating can be rebuilt. I always tell people who are in debt that there are two key steps:
Get out of Debt
Rebuild Credit Rating
Here’s some good information on rebuilding your credit rating.
What will happen to RRSP investments?
Your RRSP would be protected from creditors (you would be able to keep it) if you filed a consumer proposal. Even if you filed personal bankruptcy you would likely be able to keep your RRSP.
Initial consultations with licensed trustees, like us, are always free. Contact us to get your questions answered and to get on the path to a fresh financial start!
