Using RRSPs to Pay Down Debt
Dealing with debt can be very stressful, and people often resort to cashing in their Registered Retirement Savings Plan “RRSP” or other investments to pay down or pay off debts.
Before you cash in your savings, you should consider the following:
The time value of money – RRSPs are to help provide income for you during your retirement. Every dollar you deposit today accumulates interest. A dollar that you withdraw today could equal several dollars by the time you retire.
Tax implications – the money that you get from your RRSP is considered taxable income for the year it is withdrawn, and sufficient taxes should be withheld. Not having enough taxes withheld could leave you with a large income tax bill the following year.
If you are unable to keep up with your debt payments, you should consult a Licensed Insolvency Trustee to discuss your options before cashing-in any of your investments. Your investment savings may be exempt from seizure, so you may be able to keep them if you file for personal bankruptcy or settle your debts through a consumer proposal.
If you have already withdrawn your RRSPs and are still struggling with debt, a Licensed Insolvency Trustee can help with those debts and any income taxes you might owe as a result of cashing-in your investments.
Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of major financial stress;
You won’t be stuck in an assembly line process.
You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.
We will review your debt solution options, including filing a consumer proposal or personal bankruptcy.
We help Canadians with overwhelming debt get fresh financial starts.
Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.
We offer free consultations to review your financial situation and practical debt resolution options. Contact us to discuss your situation over the phone, a video chat, or in-person in Saint John, Moncton, Fredericton, Charlottetown, Dartmouth, or Miramichi.