Dealing With Debts in Aurora, ON
Many people living in Aurora, Ontario, can find themselves in an unsustainable financial situation, often through no fault of their own.
Creditor demands for repayments outpace their ability to meet them, and slowly their debt mountain builds.
Fortunately, credit counselling services can help.
They offer various programs and options designed to help you get back on your financial feet and reassert control over your life.
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Aurora Credit Consolidation And Bill Payments
Accredited credit counsellors provide you with a host of options for dealing with your debt, besides consumer proposals and bankruptcy.
During your initial consultation, they will ask you several questions to get a flavour of your current financial predicament.
Based on their findings, they will present you with a set of options and make recommendations.
You then choose the one that will benefit you the most.
What Are Debt Consolidation Loans?
The concept behind credit consolidation in Aurora is relatively simple.
Here you approach a single lender for the credit you need to cover all your outstanding debt.
Please note, credit counsellors themselves do not provide this loan.
Instead, they help you apply to various creditors who do.
Whether they will accept you for a loan depends on your credit rating.
If your score is low because you have not paid debts in the past, they may charge a high rate of interest, or they may refuse to provide a loan at all.
Sometimes, they will ask for a co-signer – somebody with a good credit rating who agrees to repay the debt if you don’t.
Credit counsellors know from experience that debt consolidation products work, but only when you get the support you need.
They will help you create a budget to work out whether you can afford repayments (accommodating unexpected expenditures).
Ultimately, they show you a path forward that allows you to live within your means and free yourself from the burden of debt.
What Are Debt Management Programs?
Debt management programs are similar in concept to debt consolidation loans, except they refer to the entire process of managing your finances, not just the loan itself.
Credit counselling services will often enrol you in a debt management program if they believe that you have the means to pay off your unsecured credit.
A successful debt management program involves working out how much you can afford to pay while ensuring that you maintain your quality of life.
Ideally, you want to balance your need for money in the present with your desire to pay off your loans.
Sometimes you can strike a balance, but sometimes you can’t.
Reputable credit counselling services in Aurora, Ontario, work within the rules.
Many of their programs require you to pay low or zero interest on any consolidated loan products you take out, significantly reducing or eliminating interest charges.
Debt management programs are, therefore, a form of debt relief.
Credit counsellors can discuss this option in more detail if you feel it might work best for you.
What Are Debt Settlements?
Debt settlement is a tool that allows you to pay off creditors in a single, lump-sum payment, instead of via a series of installments.
Usually, lenders make their money by charging you interest on the payments you make throughout the life of the loan.
Sometimes, though, you get to a point where those payments are unsustainable, and you need to find a way out quickly.
Debt settlements are one such route out.
Creditors get the principal on the money you owe upfront, minus the interest you would have paid, had you continued with the agreed-upon repayment schedule.
Typically, you finance debt settlements through a debt consolidation loan.
Be warned, though – creditors will not offer you debt settlements if they believe you can make monthly payments.
For this reason, you should always speak to a credit counsellor first before you attempt to come to an agreement like this.
They will tell you the likely outcome of any negotiation, given your financial circumstances.
Legal Options To Deal With Debt In Aurora, Ontario
Residents of Aurora, Ontario, have two legal options for dealing with unsustainable levels of debt.
- Consumer proposal. Consumer proposals are a form of negotiated settlement you conduct through a licensed trustee (a professional who manages the process of your behalf). The purpose of the mechanism is to allow you to reduce your total debt payment to a level you can afford, given your income and monthly essentials expenses. Creditors are often willing to entertain consumer proposals because the outcome is better than bankruptcy, where they often receive no money at all. Typically, you make repayments over two to five years, according to a new repayment schedule.
- Bankruptcy. In some situations, your only option is to file for bankruptcy. This legal mechanism effectively wipes the slate clean, eliminating all your qualifying debt and preventing creditors from contacting you to collect payment. Bankruptcy is different from a consumer proposal in that you may not have to pay any money back at all (if your earnings fall below the surplus income threshold). However, your credit rating will drop.
Get Help To Consolidate Credit
If you’re not sure which is the best option for you, you should speak with an accredited credit counsellor.
They can evaluate your circumstances and tell you which of the paths we discussed above is in your best interest.
Traditionally, people spoke with credit counselling professionals in person.
However, there are now options to get the advice you need over the phone, via online video, or by email.
Credit counsellors must keep all conversations confidential.
Many non-profit counsellors also provide their services for free (depending on whether you take out a managed program or not).
Try to avoid debt relief specialists and financial advisors who have commission arrangements with debt consolidation companies.
They may not act in your best interest.
After you discuss your financial problems with a counsellor in Aurora, Ontario, and come up with a plan of action, you’ll feel infinitely better about the situation.