Debt Settlement Strategy Potentially Useful to Canadians in Finanical Peril

By: Justin Leung on October 20, 2012

The average Canadian household faces debt levels that are over 160 percent of household disposable income. The Bank of Canada and even the International Monetary Fund (IMF) have signaled these levels of accumulated debt to be the top threat to Canada’s continuing economic stability. The sooner Canadians can find a way to pay down some of that borrowed money, the better. As Canadians seek optimal strategies to pay down their debts, they may take note of the advice of one California man who negotiated his way out of $150,000 in debt.

Kenny Golde got himself into trouble financing an independent movie he had written. He had trouble selling the movie to investors, forcing the writer himself to front the bill. When he realized he couldn’t pay off his debts, Golde was prepared to declare bankruptcy when his attorney offered him another suggestion; debt settlement.

“I have reduced my debt to zero. I have done this legally, at a fraction of the cost of the debt itself, and I saved just under $150,000”, Golde writes in his book ‘The Do-It-Yourself Bailout.’

Golde learned he could negotiate with the banks to settle his debts for a fraction of the total because this was worth more to the banks than selling the outstanding balance off to debt collectors. Golde was aiming to pay the banks a third of the outstanding balance, while a debt collector could pay as little as 5 percent of the total to the banks.

Fielding phone calls from the banks, Golde bought himself time dealing with his account managers until a debt collector offered to take approximately a third of the $76,000 balance he had on one account. Dealing with more demanding phone calls from the banks, Golde finally successfully settled a $22,000 balance down to a $10,000 payment, $39,000 down to $7,400 and $23,000 down to a $9,300 settlement.

He has no regrets about avoiding bankruptcy through negotiation and has even been a guest speaker and seminar host where he tries to help others in financial distress learn from his situation. “During the recession, so many people were going through it, so many people were behind on their credit debt and behind on their mortgage payments.”

Canadians may not have face the same degree of debt issues as our American neighbours, but Golde’s story provides a potential alternative to bankruptcy for those Canadians who face dire financial straights.