Now is the Time to Learn About Debt Relief OptionsJan 19, 2016
If 2015 taught Canadians anything, it is that circumstances can change without warning. Just as the economy fluctuated over the past year, personal situations changed quickly, leaving many individuals and families wondering where to turn next. After a job loss, divorce or serious injury, having insufficient finances to cover loss of income can compound distress and worry during an already difficult time. January is the month when a number of Canadians face great financial challenges – holiday bills are due and current debt loads are often overloaded. If you’re considering debt relief options, now is the time to educate yourself.
What should you know about debt consolidation services in Ontario?
Many people who are facing financial difficulty may have a hard time asking for help. Fear, shame and hopelessness can impede efforts to seek help or add to the confusion of finances. There are many ways to regain control over your finances, which in turn, can give you a more positive outlook for the future. When choosing a debt professional, look for a reputable company who is willing to help and listen to your needs. Here are some debt options to consider:
- Debt consolidation loans can help manage debts by compiling them into one monthly payment. When choosing a lender, make sure to find a professional who will examine your needs and offer a better interest rate than what you’re paying on your current debts.
- Home equity line of credit or HELOC is a way to add debts onto your mortgage balance by using the equity of your home. This requires a renegotiation of mortgage terms, and possibly an increase in interest rates. The bonus of a HELOC is that you may be able to add student loans onto your mortgage for those looking for student loan debt help.
- Credit card consolidation is an option for those who have multiple credit cards that aren’t maxed out. Take a look over credit balances and their interest rates and inquire about combining balances to a card with a more manageable rate. Don’t forget to freeze or cancel the other cards to avoid further debt.
What is the difference between consumer proposal and bankruptcy?
Both a consumer proposal and bankruptcy are considered formal debt relief options because they are both legally binding agreements. For those with heavy debt loads, a consumer proposal can be an attractive option. Dealing with creditors on your own can be a nightmare, especially if you are going through a difficult time. A Bankruptcy Trustee is a fully licensed professional who oversees both consumer proposals and bankruptcies. Seeking bankruptcy assistance is usually a last resort option and can often be avoided. To get a clearer picture, here are some differences between these two formal options:
- A Trustee will negotiate with creditors to help you repay a portion of your debts.
- From the day you file, interest rates are frozen, legal action is ceased, and creditors stop calling.
- Your new debt balance will be paid via an affordable monthly payment over a period up to 5 years.
- You will receive two credit counselling sessions to help you avoid future debt.
- Your credit score will improve over time.
- A Trustee will file your insolvency request, which will cease legal action, calls from creditors and absolve most debts.
- You will pay a fee for filing bankruptcy.
- Assets will be liquidated by the Trustee to pay creditors, but there may be ways to keep your home, car and RRSPs.
- You will still be fully responsible for secured debts such as mortgage, student debts and court ordered debts such as alimony and child support payments.
- Insolvency will leave a mark on your credit score for up to 7 years which can make obtaining credit very difficult.
When considering debt relief options in Ontario, remember that managing your debt is long term. Ask a Trustee or credit counsellor what programs they offer to help you avoid debt in the future, once your current debts are paid. Explore your options and get wise about debt this January. Now is the time to regain control.
Are you considering debt consolidation? Weigh your options with a debt repayment options calculator and connect with us on Twitter to learn more but searching, #LetsTalkDebt #Mythbusters #BDOdebtrelief