Debt Consolidation British Columbia
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What is Debt Consolidation?
When facing financial difficulties that include multiple debts, often with high-interest rates, one of the first options people often consider is a consolidation loan. A consolidation loan refers to taking out one loan for the purpose of paying off other debts, which is a form of debt refinancing.
Debt consolidation can sometimes be a great way to get a handle on your debt and combine your unsecured debts into a single monthly payment. To qualify, you will likely need a good credit rating, a stable income, and in some cases, collateral to provide security for the debt and/or a co-signer to secure the debt.
If you don’t qualify for a consolidation loan through your regular financial institution, you may be tempted to obtain a loan through a high-interest financing company. That will come with its own set of issues that can frequently make your debt situation worse than it was before.
The two main issues we have seen in the past are:
- Higher interest rates and higher fees associated with obtaining the loan. Most of these loans are at a minimum of 33% interest rate. The credit cards are currently charging about 19.99%.
These high-interest financing companies will advise that their loan will improve your credit bureau. The fact is your bank did not give you the loan because your credit rating is already a problem. If you have missed a payment on a Credit Card, that missed payment will stay on your credit bureau for 6 years and will affect your credit rating for the entire time. The truth of the matter is these high-interest finance companies spread the higher interest out over a longer time frame. They make the loan look better than continuing to pay the credit cards because your monthly payment will decrease. They don’t tell you that you will be paying for a substantially longer period of time.
If you cannot get a consolidation loan at your financial institution (or another bank or credit union), you do not qualify for a proper consolidation loan and shouldn’t be trying to obtain a loan through these high-interest financing companies. You are better off paying lower interest rates directly on your credit card debt.
Debt Consolidation Alternatives
If you’ve been unsuccessful at qualifying for a consolidation loan through your financial institution, a Consumer Proposal may be the preferable alternative. A Consumer Proposal is a tool legislated by the Federal Government and administered by a Licensed Insolvency Trustee, which is another way to consolidate your debt into one monthly payment. The benefits of a Consumer Proposal include the following:
- Reducing your overall debt without further interest charged
- Collection activity ceases upon filing
- Government debts can be included
- Assets are usually not impacted
- Avoids filing bankruptcy
If you are overwhelmed with debt, a Consumer Proposal may be the best option to resolve your debt situation in the shortest amount of time. Talk to a professional at D. Thode & Associates Inc. today who can help you navigate these options and more.
Our debt relief specialists will meet with you free of charge to review your situation and assist you in developing your plan to relieve your financial issues.
Learn Your Alternatives
Bankruptcy
Applying for personal bankruptcy releases you from your debts and gives you a fresh financial start. We’ll help you prepare documentation for bankruptcy and walk you through the process.
Consumer Proposals
Let us negotiate a payment plan for you though the filing of a consumer proposal. You don’t have to file for bankruptcy. Pay your creditors on a modified payment schedule with no further interest.
Debt Consolidation
When facing financial difficulties that include multiple debts, one of the first options people often consider is a consolidation loan. A consolidation loan is taking out one loan for the purpose of paying off other debts. Learn about all your financial alternatives and see what’s the best option for you.
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