Canadian lenders may have taken fewer risks than their American counterparts during the years leading up to the recent recession, but it wasn’t enough to insulate the country completely from the toxic effects of the global financial crisis. If you’re like most Canadians, you probably feel a great deal less secure in your finances than you did just a few years ago. You may even be worrying where your next paycheck is going to come from.
Worse, you may have accumulated unseemly amounts of debt in the easy-credit days preceding the recession. Until recently, banks were practically giving away credit cards, personal loans, business lines of credit and other unsecured credit products, seducing millions of Canadians with the promise of cheap cash and a leisurely repayment schedule.
If you fell for the hype, don’t be too hard on yourself. Instead, resolve to dig yourself out of your predicament with the help of a certified Canadian debt relief company.
There are almost as many ways to get out of debt as there are to become ensnared by it in the first place. You’ve no doubt seen slick TV spots or online banner ads hawking debt consolidation loans, and you probably understand the concept of personal bankruptcy as well. You may even have noticed billboards or bus-stop ads touting the advantages of not-for-profit credit counseling agencies that promise to reduce your debts for next to nothing.
Every debt problem is different, and there’s no one-size-fits-all approach to getting out of debt. Choosing the appropriate debt relief option can be a complicated process that turns on the value of your outstanding debts, your relationship with your creditors, the size of your savings cushion, your employment status, and countless other factors.
It’s a big choice, so don’t allow anyone to rush you into making a decision. Instead, take some time to consider your options and make a determination that you can live with.
With aggressive advertising support and easy-to-understand terms, debt consolidation loans may be the most popular Canadian debt relief option. From British Columbia to Nova Scotia, thousands of desperate Canadians enroll in these programs each year.
As their name implies, debt consolidation loans are credit products designed to reduce the aggregate interest rate on your outstanding unsecured debts. The idea is simple: Debt consolidation loans allow you to pay off all of your existing debts at once, effectively trading multiple monthly payments for a single obligation.
Even if your credit is less than perfect, you’ll probably be able to secure a debt consolidation loan large enough to cover your outstanding debts in one fell swoop. Since you’re trading one basket of debt for another, however, it’s important to shop around for the lowest possible interest rate before you pull the trigger on a debt consolidation loan.
As anyone who needs a debt consolidation loan is an inherent credit risk, you’re guaranteed to pay a premium for it. As such, you’ll need to calculate just how much your new debt consolidation loan will save you relative to your old collection of debts. For instance, taking out a $10,000 loan with a 15 percent interest rate to replace a credit card bill with an average interest rate of 20 percent will save you $500 per year.
Rates may be more favorable in certain parts of the country. If you live in oil-rich Alberta, where credit is still quite easy to come by, your lender may knock several percentage points off of your annual charge. On the other hand, you may pay a hefty premium over the national average in hard-luck Newfoundland.
No matter where you live, debt consolidation loans carry significant risks. Your lender will likely give you less rope than your former creditors, who were only too happy to let you run a balance on your credit card. Don’t be surprised if a single missed payment sends you into credit-destroying default on your loan.
Credit counseling is another apparently cheap option that carries some steep hidden costs. Using a credit counseling service to seek Canada debt relief will seriously affect your credit score, making you unattractive to lenders and employers alike. Worse, the credit counseling process can be interminable with complex cases taking up to six years. Indeed, the only real upside to these services is their ability to put an immediate end to phone harassment from your creditors.
Although it’s not perfect for every predicament, debt consolidation through settlement offers plenty of advantages over other debt relief options. Unlike debt consolidation loans or credit counseling services, debt settlement can meaningfully reduce the total amount that you owe your creditors. Depending on the number and size of your debts, the process typically takes between 12 and 48 months.
While every case is different, many creditors may be willing to settle for as little as 40 percent of what you owe. In other words, debt settlement can save you up to 60 percent on your outstanding unsecured debt load. Although your credit may suffer temporarily the negative effects of your decision to settle, your debts won’t last as long as the devastating consequences of bankruptcy.
Stop worrying about how you’ll make your next credit card payment and resolve to get yourself out of debt for good with a debt settlement program. Whether you live in Saskatchewan, Ontario or anywhere else in this great country, this uniquely Canadian debt relief solution will save you thousands in ruinous interest payments and probably hundreds more on treatments for stress-related white hairs.
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