Credit Card Debt

Canadian Consumers and Credit Cards

Canadian consumers have over used their credit cards in the last decade, and it is catching up with them. It stands to reason that many are now seeking a way to eliminate much of the debt they built up. If you consider that the average debt per consumer excluding mortgages is over $25,000 – according to TransUnion – there is every reason to want to reduce the number.

Since many credit cards carry interest rates as high as 20% APR, it was easy to build up considerable debt and it is showing in the number of bankruptcies declared. In 2010, almost 100,000 Canadians filed for bankruptcy. Others are seeking other means of debt relief, too.

Canadians have historically turned to such options as credit counseling, debt consolidation loans, consumer proposal and bankruptcy. While these options can still work in some cases, many consumers have discovered a new type of debt relief – debt settlement.

Debt Settlement: Reducing and Eliminating Debt

Debt settlement is an aggressive method of reducing and eliminating debt while satisfying the creditor. It works by a third party company working with the consumer to negotiate with their creditors and set up a plan of repayment. Selected unsecured debt is rolled into one, affordable monthly payment plan. The method works especially for those whose income has become compromised by job loss, reduction of income, medical bills or even divorce. It is the closest thing to bankruptcy without undergoing a legal process.

Whereas debt consolidation requires a loan that someone with a low credit rating cannot qualify for or may not have the collateral to put up for such a loan, debt settlement is based on what you can pay each month. It is a far more flexible option than consumer proposal because not all debt must be declared and the payment plan is not so rigid. Compared with bankruptcy, it works more quickly and does not have the stigma attached to it.

Choosing a Professional Debt Settlement Company

While it is possible to pursue a debt settlement with creditors on your own, there’s a bit more to it than most consumers think. A professional debt settlement company not only provides a subjective analysis of the financial situation but its representatives are well-versed in how each creditor works. This is very valuable information and help when deciding which accounts to enroll in a program. Having your negotiations done by experienced professionals is key to achieving the highest reductions, which allows the consumer the opportunity to succeed in getting rid of their debt. There are fees attached when using a debt settlement company but they prove their worth when your time and your money are considered.