Ontario Debt Consolidation Services
Debt consolidation offers you a way to tackle your debts by turning them into one monthly payment.
For people looking for debt solutions, it can be an excellent way to start paying off their debts and moving towards a healthier financial future.
If you’re struggling with debt and need to reorganise your finances, you should consider debt consolidation as one of your options.
It might not be for everyone, but it could be the debt solution that works for you.
When you need debt consolidation in Ontario, you should be sure to understand what it is, who it’s for, and how to consolidate your debts.
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What Is Debt Consolidation?
Put simply, debt consolidation is the process of taking your multiple debts and turning them into one, more manageable debt.
When you consolidate your debts, you will only have one payment to make each month, instead of multiple payments.
This usually means you will pay less in interest, and you might be able to pay your debt off sooner too.
With some types of debt consolidation, you can even completely eliminate interest and simply pay back what you currently owe.
You might also be able to have some of your debt forgiven.
Types of Debt Consolidation
There are a few ways you can use debt consolidation to make your debts more manageable.
These include a debt consolidation loan, a debt management plan, a debt settlement program, and a consumer proposal.
Each of these options is different, although they do share some similarities.
Which debt consolidation type is right for you will depend on your circumstances.
A debt consolidation loan is a loan that you take out to repay your current debts.
You will then repay the consolidation loan.
For example, you might use one of these loans to pay off debt on multiple credit cards.
This option is one of refinancing, turning your multiple debts into a single debt.
Debt consolidation loans include second mortgages, lines, or credit and bank loans.
There are some conditions you will need to meet to take out a loan, including having a regular income and being able to show that you will be able to pay the monthly payments.
However, some people find that they don’t qualify for this type of debt consolidation and need to consider other options.
A debt management plan is something that you can explore through a credit counselling service.
These allow you to consolidate some types of debt, and your credit counsellor can negotiate to try to reduce your interest rates or even secure an interest-free period.
You will work with your credit counsellor to create a payment plan that will pay your debts in full during a set period of up to five years.
Not all debts can be included, but you can choose which ones you want to consolidate.
Many credit counsellors are free and non-profit.
Debt settlement services can sometimes be confused for debt consolidation in Ontario.
Rather than offering a debt consolidation loan, they allow you to use their agency to combine selected debts.
These are private companies, and they can charge large fees to use their services.
It’s important to be careful with debt settlement companies, as they might not be the best solution.
In fact, you might be able to negotiate with your creditors yourself without their help.
A consumer proposal is an alternative to bankruptcy that allows you to retain your assets.
It’s a way you can consolidate your debt, but it’s one that you should consider carefully.
You can use a consumer proposal to deal with almost all unsecured debts, which isn’t the case with all other debt consolidation options.
You can also eliminate interest and repay less than you owe.
You work with a Licensed Insolvency Trustee to file a consumer proposal, and they will act as administrator for your file, including negotiating with your creditors.
As soon as you file the proposal, creditors need to stop trying to contact you or collect your debts.
Debt consolidation in Ontario might be an option if you need to find a way to pay your debts.
However, you need to explore all of the possibilities before you can decide if it’s right for you.
In addition to looking at different debt consolidation options, you should also learn about other debt solutions.
A credit counsellor or Licensed Insolvency Trustee can help you to understand your choices.
A LIT is the only person who can legally help you with consumer proposals and bankruptcy.