2016 is fast approaching, and that usually means setting goals for the year ahead and making plans to get certain things back on track. For many Canadians, this means taking a good, hard look at finances and often attempting to take control of unruly debt by consolidating it. Often the first thing people wonder when considering this option is how to consolidate debt to best suit their own needs.

There are different ways to consolidate debt depending on your credit, assets and cash flow. Each offers its own pros and cons. If you are considering debt consolidation to help start 2016 on fresh financial footing, here are a few of the most popular options:

Mortgage Financing

Mortgage financing usually means taking out an additional mortgage alongside the one you currently have.

• Pros: One low payment, lower interest than a loan or line of credit.
• Cons: Expensive closing costs, uses up equity, stretches out debt repayment over a really long time, harder to get for those with bad credit, home ownership a prerequisite.

Personal Loan/Line of Credit

This option usually involves heading to the bank or a private lender and taking out a personal loan or line of credit to consolidate.

• Pros: Usually easy to get compared to a mortgage, not a long process, no upfront fees to borrow.
• Cons: Generally higher interest rates, and if revolving can become a temptation that is hard to resist for many.

Consumer Proposal

• Pros: One payment, no interest, stops collection action, reduces debt, often a lower monthly payment
• Cons: Temporary impact to credit.

Bankruptcy

• Pros: One payment, significantly less debt, stops collection action, no interest
• Cons: Reporting obligations to the trustee, impact to credit, the amount to be repaid in bankruptcy can change – for example, if you make more money or acquire something the trustee can ask you to repay more surplus income.

When debt consolidation seems like the best route to take to re-establish your finances and achieve financial stability, these may be the options you consider. Each of these has some important advantages, and the choice will largely depend on your own circumstances and future goals.

Our best advice – get professional advice. A financial consultant with experience helping people regain their financial footing is the best person for the job – take advantage of their knowledge and expertise and get a plan in place that helps you achieve your goals.

Want advice you can trust? Call DebtCare Canada today at 1-888-890-0888. We can help you get ready for 2016!