Ontario Debt Consolidation Options
Debt Consolidation in Ontario, ON
A lot of people who apply for debt consolidation in Ontario are turned down for the loan.
When you are struggling to make payments on time, a debt consolidation loan can be the first solution you consider.
However, debt consolidation loans are not always a suitable debt relief option.
This begs the question of why Ontario debt consolidation loans remain on top of debtors’ to-do list.
Many households who experience crushing debts for the first time are not always aware of the different debt solutions available.
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It can be daunting to reach out to a financial expert about your debts.
Therefore, turning to the bank with whom you already have a secured loan, such as a mortgage, can seem like a good idea.
Unfortunately, banks are likely to turn you down, even if you already have a loan with them.
When this happens, you need to consider your next step to tackle your debts.
There are debt management solutions that can provide similar relief to debt consolidation for Ontario residents.
Using debt management or debt settlement solutions, you can find ways to repay the money you owe, either in full or partially, depending on your financial situation and the agreement you can arrange with your creditors.
Here is what you need to do to bounce back after your debt consolidation loan has been turned down.
Why people need Ontario debt consolidation services
As a rule of thumb, debt consolidation services can bring all your debts together so that you only need to make a monthly payment.
When you are eligible for debt consolidation loans in Ontario, the loan repays all your creditors at once while your monthly payments go toward the bank or the consolidation company.
As a result, once the loan is accepted, it can settle your creditors immediately.
This prevents further actions from happening, such as a lawsuit or creditors passing your case to collection companies.
For debtors, it’s the guarantee of immediate peace of mind.
However, it’s crucial to bear in mind that Ontario debt consolidation loans are designed to repay your debt in full.
You can, however, make repayment more manageable with a decreased interest rate.
Why are you turned down for debt consolidation in Ontario?
While debt consolidation loans provide an effective debt management solution, they have strict qualifying criteria that can exclude many debtors.
Debt consolidation companies focus on applicants who can meet the following criteria:
- They have a high income;
- They have assets that can be used as collaterals;
- A cosigner is available;
- They have a good credit rating.
Bank and consolidation companies will require all or some of the above-mentioned factors.
However, when you are already facing debts, it can be challenging to fulfill the qualifying requirements.
Indeed, late payments affect your credit score, which is a cause for exclusion.
Alternatively, if your household has a low income, you are unlikely to be successful with your loan application.
I’ve been turned down for Ontario debt consolidation. What now?
However, it doesn’t mean that there is no way out of debt.
You will need to assess your financial situation objectively, which can be tricky to do by yourself.
But you can reach out to a trustee in Ontario to book a free-of-charge financial assessment consultation.
BankruptcyCanada.com has trustee offices in all the main cities in Ontario:
- Niagara Falls
- St. Catherines
You can find a trustee local to you for a free, non-judgmental consultation.
Be sure to bring all relevant financial information with you, such as your household income, a list of your creditors, a list of your assets and their value, and how much money you owe.
Your trustee will ask questions to get to understand your financial situation and your objectives.
It’s important to be open about what you want to achieve.
For instance, someone who wants to be debt-free as quickly as possible will not require the same debt solution as someone who wants to repay their debt in full.
Alternatives to Ontario debt consolidation
If you wish to repay your debts, either in full or partially, using one monthly payment, your trustee can recommend the following options:
- A consumer proposal,
- Credit counselling debt management plan.
The consumer proposal is a legally-binding debt management program that can only be administered by a trustee.
It can settle most unsecured debts as well as government debts.
When you file a consumer proposal, the process stops all creditors’ actions, including lawsuits.
Your repayment plan lets you settle your debt with up to 80% reduction on the amount you owe.
At the end of the consumer proposal, the debt is forgiven and disappears from your credit report.
A credit counsellor can provide a similar debt management service to a debt consolidation loan in Ontario.
The counsellor negotiates an interest waive with your creditors.
But you will repay the debt in full, using one consolidated monthly payment over an agreed period of time.
The debt management program also appears on your credit report for several years after its completion.
Alternatives that don’t consolidate but cut down payments
Consolidating your debt into one single payment may not be a suitable option.
If this is the case, your trustee can provide other debt management solutions that will suit your financial situation:
- Personal bankruptcy,
- Debt settlement advice.
Personal bankruptcy is, aside from the consumer proposal, the other legally-binding debt settlement program that only a trustee can administer.
When you file for personal bankruptcy, your creditors’ actions stop.
In bankruptcy, you are not typically expected to repay your debts.
However, you need to pay the cost of bankruptcy, $1,800.
Your debt is forgiven once the bankruptcy cost is repaid.
Personal bankruptcy affects your credit rating, giving you an R9 rating.
But it puts you in a better position to rebuild your credit.
Debt settlement is, in essence, the result of negotiations with your creditors to new payment terms.
You can negotiate to pay less than you owe, for example.
However, debt settlement plans can require individual payment plans with each creditor.
Additionally, there is no guarantee of success.
When debt consolidation isn’t an option for Ontario residents, discover other debt management solutions in all confidence by contacting a licensed insolvency trustee on our website.