Are you swimming in debt? Even worse, are you drowning in debt? Most of us have had debt problems at some point in our lives, so you are not alone. But we all have had to have some help, a plan and a dedicated effort in order to resolve those problems. You can too. Maybe debt consolidation might be a solution for you. The good news is that being in debt and asking for help with it doesn’t have the stigma it once had.
There are many different companies offering a range of debt counselling and debt consolidation services. Millions of Canadians have had their credit rating restored and have gotten back some peace of mind around their financial situation. Do you have a serious debt problem? Here’s a few ways to check it out for yourself.
1. Questions to ask yourself
Can you make the monthly payments on your credit cards? Do you ever miss a payment or juggle payments each month? Here’s another way to decide. If your loans or debts are more than 30 percent of your monthly income, you likely have a debt problem. The question is what are you going to do about it.
2. Talk to someone
Your first step should be to talk to a financial counsellor or visit a debt counselling company or agency to find out about your options. There are actually many different options and approaches to reducing your debt load. The main option is to get a debt consolidation loan. That takes all of your current debts and transfers them into one debt consolidation loan.
The financial counsellors at a debt counselling agency can help you develop a monthly debt repayment plan that you can afford. Afterwards, they do the heavy lifting of approaching your creditors and asking them to take these lower payments. They will also ask them to waive any additional interest so that all of your money goes to reducing your debt. All you have to do is make your monthly payment and they pay out the agreed amount to your creditors on a pro-rated basis.
3. Consider your options
Debt consolidation allows people who owe a lot of money to combine all their multiple debts from all sources into one regular monthly payment. This can include all type of credit cards, lines of credit and personal loans. Debtors like it because they don’t have to deal with the people they owe money to, who likely aren’t very happy with them.
Creditors like debt consolidation because at least they can get back most of their money and while they’d like the interest that might accrue, they can live with getting their cash back. This is a win-win situation where debtors pay a one-time set up and administrative fee and all of the rest of the money goes to relieving their overall debt.
4. How about a loan?
A debt consolidation loan allows a debtor to repay debts to several or all of their creditors at once. They are negotiated by a debt counselling agency or company. To qualify for a debt consolidation loan, a person needs a regular income and be able to prove that they can make the payments required under the debt consolidation process. All personal loans and credit cards are eligible, but mortgage debts or previous debt consolidation loans are not eligible to be covered under such a type of loan.
5. Life after debt
Getting out of debt is easy but staying out of debt trouble is more of a problem for many people. They need a plan to control and monitoring their spending a debt consolidation loan. That might include getting rid of all credit cards, except for one that is held in the case of an emergency. And they should prepare a weekly and monthly budget to see where their money goes. You just don’t want to get out of debt, you want to stay there.