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Tag: debt consolidation

  • Is a Debt Consolidation Loan the Answer to Holiday Debt?

    debt2You made it through the holidays and now the credit card bills are rolling in. You went a little over your original holiday budget (don’t we all?), and now the credit cards are maxed out with no real way to pay them off. Perhaps you’ll just make the minimum payments for a while, until you’re back on your feet and feeling more secure – but will that ever happen? Do most of us actually have that extra cash each month to cover those bills? Probably not, since we wouldn’t rely so heavily on credit cards for holiday purchases if we did.

    Ok, so what is the problem with just paying the minimum payment? At least the bill is being paid, right? Sure, you’re paying the bill, but those monthly payments are comprised mainly of interest, meaning your actual balances decrease by mere pennies – and don’t ever really go down.

    This seems pretty negative so far, we know, but it is about to get better. Instead of just paying the minimum payments and not getting anywhere, consider a debt consolidation – this is a great way to save interest and get rid of those balances.

    If you own your own home, you’ve got access to a consolidation product that can save you a lot of money and time. Using your home is one of the cheapest ways to consolidate debt – but a regular mortgage can mean long terms and higher interest. Instead, go for one that is handled more like a loan.

    For example, if $20,000 is required to pay off your debt, and you’re considering a normal second mortgage, your broker will amortize that debt into the first or second mortgage and stretch it over 25 years. That means that you are paying interest on $20,000 for 25 years – when that is largely unnecessary.

    Instead, when you work with a company that finds a mortgage product that works more like a loan, one that does not involve your first mortgage in the process, the issues with amortization and interest disappear. For example, a 5 year amortization and 5 year “open” term mean the debt is done in 5 years or less at your option, your first mortgage is not disrupted and you are not paying that interest for a long period of time – and that interest is lower than most other debt consolidations because it is a mortgage.

    If you want to start 2016 on the right track financially, a debt consolidation loan may just be the answer to dealing with those holiday bills – and a mortgage that is structured more like a loan is a great way to do it!

    For more about a mortgage-style debt consolidation loan please call DebtCare today at 1-888-890-0888.

     

  • Is Credit Counselling in Canada a Debt Consolidation?

    Credit Counselling in CanadaWe have all heard the commercials on the radio and television talking about debt consolidations and credit counselling. When you have a debt that is becoming increasingly difficult to pay, these may seem incredibly enticing – but it can be difficult to know what each one means, or if they are in fact even different. So, is credit counselling in Canada the same as debt consolidation, and if not, what is the difference?

    Firstly, no, credit counselling is different from a debt consolidation. Many people confuse the two, but there are major differences. Both can represent significant debt relief, but each one requires a specific process that needs to be followed properly in order to be successful.

    Credit counselling in Canada – credit counselling is usually not for profit and is usually funded by the bank or your creditors. With a credit counselling proposal, you are essentially going to your creditors and asking to have the interest on your debt frozen and for them to accept a reduced monthly payment based on your budget. If accepted, you make one payment to credit counselling and they disperse the money to your creditors. This means a single monthly payment for you, that you can afford, and drastically increases your creditors’ chances of being paid, on time, each month.

    Some things to keep in mind with credit counselling: it does not reduce your overall debt. Although your interest is frozen and your payments may be reduced, you are still on the hook for the entire amount. Additionally, with credit counselling in Canada, the damage to your overall credit rating is the same as in bankruptcy – all ratings turn into R7 and I7 for a period of 3 years from the date the proposal is paid in full.

    Debt consolidation – A debt consolidation is when you are approved for a loan to cover the entirety of your debt. You then pay off your debt completely, and just pay that one loan on a monthly basis. With a debt consolidation, many of the same benefits are visible, such as one monthly payment and reduced interest, but without the damage to your credit.

    When you have financial challenges and you want to consolidate debt into a single payment, you have a few options, including a debt consolidation loan or mortgage financing. Other options for debt relief may include a consumer proposal or bankruptcy. You viable options will depend on a number of things, including your credit, assets, budget and cash flow, and so it always helps to speak to a debt specialist to determine all of your options.

    For more about debt consolidations and credit counselling in Canada, please contact DebtCare Canada today by calling 1-888-890-0888.

  • Personal Debt Management – How You Can Regain Control of Your Finances

    Debt ManagementEven as the Canadian economy stabilizes, many Canadians continue to find themselves dealing with the difficulties brought on over the past few years. Debt has become, or rather continues to be, a major stressor for countless individuals. Although some Canadians have been able, over the past year, to climb out of that financial black hole, others still struggle to find a foothold.

    If you are in the latter category, does this mean that you are forced to continually struggle with debt? No. There are many personal debt management options that exist which can help you get out of debt. Here are the main ones – as well as a brief description of how they work.

    Debt Consolidation: Consolidating your debt means just that – consolidating all debt totals into one. This is usually done through a loan. With a debt consolidation loan, all other debts are paid off, and you are required to make only one payment each month. There are a number of benefits to this type of debt solution, including the convenience of a single monthly payment and the amount of total interest saved through consolidation (the interest rate for consolidation loans are often far lower than other types of debt, ie. credit cards).

    Depending on your circumstances, that can be a few difficulties with a debt consolidation. Since you are essentially getting another credit product, your credit will likely need to be in pretty good shape – but if you are struggling with a mountain of debt or having a hard time making monthly payments, your credit may not be stellar. Also, if you do have a large amount of debt, securing funding to consolidate all of it may also prove quite difficult.

    Consumer Proposal: A consumer proposal is essentially a proposal made to your creditors to reduce the amount of your debt – the total of which is determined based on your income and ability to make the monthly payments. It is conducted by a trustee in bankruptcy and is an official process (meaning you cannot do it on your own). Once accepted by the majority of your creditors, your debt will be reduced and you are required to make manageable monthly payments to pay off the debt in a much shorter period of time.

    There are many positives to a consumer proposal. Firstly, it reduces the total amount that you owe. Secondly, it consolidates all of your monthly payments into one, single monthly payment. It will also stop any collection enforcement action against you and can be paid in full at any time. That being said, it will impact your credit rating, but if you are considering a consumer proposal this has likely already taken place.

    Bankruptcy: Although often considered the least popular, for many individuals bankruptcy is the only realistic option. In a bankruptcy, your creditors receive notice that you have declared and your debts are cleared. Bankruptcy involves a court determination that your assets are to be taken over by a trustee for the benefit of your creditors. During your bankruptcy you do have some responsibilities, including proving income monthly, attending credit counselling sessions, and making minimum monthly payments, but collection enforcement actions are halted against you.

    Depending on your own unique situation, one of these may be a very attractive debt solution. Our best advice? Seek out some professional debt management guidance in order to choose the option that best suits your needs and circumstances.

    For more on these and other debt management options, please contact DebtCare Canada today by calling 1 (888) 890-0888.

  • Debt Consolidation Through Mortgage Refinancing – The Right Choice for You?

    Debt ConsolidationWith the consumer debt levels in Canada reaching all-time highs over the last few years, money (or perhaps a lack of money) has been a common topic of conversation. As a result, debt relief is also a common subject, and it seems that no matter where you turn these days, debt reduction is the topic of the day. And one of the debt reduction solutions that is becoming increasingly popular is mortgage refinancing.

    If you are in debt and considering refinancing your mortgage to get out of it, it might be a smart choice. Many homeowners struggling with debt see mortgage refinancing as an attractive option for various reasons. Firstly, mortgage interest is usually far lower than credit card interest (one of the main types of consumer debt) – sometimes by as much as 20%. By paying off one with the other you can end up saving a ton in interest. Secondly, this works to consolidate all of those different monthly payments into one neat, tidy sum – far easier to track and pay (only past balances though, not charges made after the consolidation). It is really no surprise that mortgage refinancing seems enticing, is it?

    However, mortgage refinancing to consolidate debt isn’t the right option for everyone. Of course, if you don’t own a home, this option isn’t going to work for you. But even if you do, it may not work for several reasons. To begin with, Canadian Mortgage and Housing Corporation (CMHC) guidelines have made it more difficult than previously for homeowners to refinance. Changes to these guidelines mean that CMHC will only insure a refinance of up to 80% of a home’s value, so if your debt means that you will exceed this 80%, the option may not be the one for you. Furthermore, in order to find approval for mortgage refinancing your credit has to be in great shape. Anything less than pristine is usually an automatic no.

    If you meet the requirements and can consolidate your debt by refinancing your mortgage, then by all means, get to it! As mentioned, for some people this is the most intelligent debt reduction strategy available. However, if you are worried that your current debts will exceed the maximum amount allowed by CMHC or if your credit is less than stellar, it might be time to consider some other options. A great place to start to discuss the various solutions that would exist – and how they would work for your unique circumstances – is a debt reduction company, one that has the experience and knowledge to help you get out of debt.

    For more information about refinancing your mortgage for debt consolidation, or to find out about the other debt reduction strategies available, please contact DebtCare Canada today by calling 1-888-890-0888 or visit www.debtcare.ca.

  • Beware of Imitations – Debt Consolidation Companies and You

    Debt Consolidation CompaniesIt is very common, no matter where you go, to hear commercials or radio ads talking to you about debt. With consumer debt levels as high as they are in Canada, it comes as no surprise that many Canadians are looking for a way to help ease their financial worries by getting rid of some of that debt – and debt reduction or debt companies are offering this help. Unfortunately this umbrella term encompasses both those companies who genuinely want to assist you in getting your debt under control and those with less than virtuous objectives.

    Firstly, what is a debt consolidation company (or rather, the right kind of debt consolidation company)? A reputable company can help you get rid of your debt in a way that not only protects you, but helps you regain control of your debt. The possible solutions may include consolidating your debt, mortgage refinancing, bankruptcy or a consumer proposal – but whatever the solution, it should be based on your own unique situation. The company should not require full payment of a set amount before paying off creditors, and should not hold fast to only one type of debt reduction plan.

    When you struggle with debt, the last thing you need is someone taking advantage of that vulnerability. Thankfully, the Ontario government has stepped in to help reduce that likelihood. Earlier this year, the Ministry of Consumer Services took a step to help protect consumers from the unfair business practices of those companies claiming to offer debt relief services. This commitment included new rules put in place outlining appropriate and acceptable behaviour.

    Here are a few of the rules that companies must adhere to:

    –        No company may charge upfront fees
    –        Fees charged to consumers cannot go above a specified amount
    –        Contracts must be clear and easily understood
    –        Consumers must be given (and informed about) a 10-day ‘cooling-off’ period, during which they can consider the agreement and change their mind if so desired

    Any company not complying with these new rules will have their license revoked.

    All of this being said, there are still a number of companies out there that try to skirt the rules and remain persistent in their attempts to put their needs before yours. If you are looking for a debt consolidation company make sure you do your research and find one whose methods are going to actually help you achieve your goals.

    For more information, or to speak to a professional debt consolidation company, please contact DebtCare Canada today at 1-888-890-0888.

  • Mortgage Refinancing: A Viable Debt Solution?

    Mortgage RefinancingDebt in Canada has become a major problem for many individuals. The ease with which credit is granted by many credit companies sometimes makes it tough to avoid temptation, but the aftereffects can be distressing, especially if it gets to the point that it is hard to keep up with or make payments. There are many debt solutions out there, one of the most popular being mortgage refinancing.

    What is mortgage refinancing? When you refinance your mortgage to consolidate debt you are essentially using your home equity to pay off debt. Many people choose to refinance their mortgages to pay off debt because mortgage financing offers flexibility and often you can get a far lower interest rate as well as the convenience of a much more manageable single monthly payment.

    Over the past year there have been many changes to Canadian Mortgage and Housing Corporation (CMHC) rules, many of which make it tougher for homeowners to consolidate using mortgage refinancing. Previously CMHC would refinance as much as 95% of an individual’s home, and would offer lines of credit to do so. However, they no longer issue lines of credit to consolidate, and the amount has been lowered to 80%.

    The banks have backed these changes. As a general rule, banks will only grant refinancing if your new mortgage will not exceed 75% of your home’s current value (some approve at an even lower percentage). That means that if your new mortgage plus your unsecured debt is more than 75% of the value of your home, approval is not likely.

    CMHC insured mortgages are one of many mortgage options for refinancing your mortgage to pay off and consolidate debt. There are so many different types of companies outside of the banks who will compete for your business: credit unions, finance companies, trust companies, mortgage investment firms and even private individuals.

    What if your credit isn’t great? If you have less than stellar credit it might be harder to obtain mortgage refinancing for debt consolidation through a bank. Banks and finance companies like to see that those they invest in are not a high risk, and if your credit is bad you may be too risky. With that said, if you have good equity many other lenders may be willing to extend financing to you. If you seek mortgage refinancing as a debt solution but are unable to find approval, an alternative solution might be a better option. Non-mortgage refinancing debt consolidation, a consumer proposal or bankruptcy might be better suited to your situation.

    If you are thinking about mortgage refinancing as a possible debt solution, it is best to speak with an experienced debt consultant first, one who will assess you and present you with all of the financial options available to you, the pros and cons, and guide you to the best financial plan.

    For more information about mortgage refinancing please contact DebtCare Canada today by calling 1-800-890-0888.

  • Debt Management – You Don’t Have to Do it Alone

    Debt ManagementWhen you are in debt, the personal issues that all too often accompany it can be overwhelming, and sometimes the task of ridding yourself of this financial burden can feel insurmountable. Knowing where to turn for advice or assistance can be tough, and so many people instead try to do it on their own. Debt can be crippling, but getting out of debt doesn’t have to be hard when you have the right people behind you, those that can offer debt management plans that can relieve your financial stress.

    There are several different types of debt management solutions available, and choosing the one that best suits your financial situation takes knowledge and a careful consideration of the options which exist. The most effective way to set in motion the best debt management program is to speak with a professional debt consultant.

    What types of debt management programs can a professional organization offer?

    Debt consolidation: Often debt becomes so problematic because monthly payments can take up the majority of your disposable income. This becomes even more challenging when those monthly payments are mostly interest, meaning that you are making very little principle payments overall. With a debt consolidation these payments are all combined into one manageable monthly payment, often with far lower interest. That being said, debt consolidations are often options only for those with credit in somewhat good standing.

    Consumer proposal: Once your monthly payments become so large that you are often unable to meet them all, collection agencies may begin calling. A consumer proposal is a smart debt management program that allows you some relief from your debt obligations by lowering the amount you are required to pay back. Done in negotiation with a bankruptcy trustee, a consumer proposal leaves you with one monthly payment, freezes interest accumulating on debt and also stops collection action being taken against you. Consumer proposals are administered by bankruptcy trustees. It is important to note that trustees do not represent the bankrupt; they act to make a fair financial arrangement between you and your creditors. Never visit a trustee without your own representation. You want to work with someone with expertise in consumer proposals and bankruptcies to get a plan together and you should be able to count on your representative to negotiate with the trustee on your behalf.

    Bankruptcy: If you have found that your monthly debt repayments far surpass your monthly income, and that you can’t keep up, bankruptcy might be the best option for you. Like a consumer proposal a bankruptcy must be conducted with a bankruptcy trustee, but it can leave you with relief from collection calls or wage garnishments. A bankruptcy can decrease your credit score, but if you are considering this option you have likely already damaged it.

    Credit counselling: Credit counselling organizations are not-for-profit organizations where you make a single monthly payment to them which they distribute to your creditors. Credit counselling repayment terms can be long and grueling and credit counselling programs can result in significant damage to your credit.

    Getting out of debt can be tricky, but you don’t have to do it alone. Ease the stress by choosing a debt management program in consultation with a professional debt consultant.

    For more information about how a debt management program might be the solution to your financial problems, please contact DebtCare Canada today by calling 1-800-890-0888.

  • Getting Out of Debt Blog Series #3: Debt Consolidation

    Debt ConsolidationWhen debt is taking over your life it can be difficult to see the light at the end of the tunnel. Mounting monthly payments that include mostly interest can become difficult to meet and missed payments can lead to collection calls or other enforcement action. You are not alone – many Canadians are dealing with heavy debt loads and don’t know where to turn. This 3rd blog in our ‘getting out of debt blog series’ talks about debt consolidation and provides you with the information necessary to help you determine whether this is the best route to take for getting out of debt.

    What is debt consolidation? It is pretty straightforward – a consolidation of your debt into one monthly payment, saving you thousands of dollars in interest and making the monthly payment far more manageable. It is a loan given by a financial institution which allows you to pay off all of your unsecured debts to creditors at once (secured debts such as car loans or mortgages are typically never included).

    A debt consolidation can be achieved through a secured or unsecured loan or line of credit. Secured consolidation loans often involve a house, vehicle, investment or guarantor as security.

    Obviously if you obtain a debt consolidation, your credit is paid off and the result will be no further collection or enforcement action by your creditors. Debt consolidations will also in some cases lower your interest rates and monthly payment. If you have damaged your credit, or are having enforcement action taken against you by your creditors and have no assets to pledge as security – being approved for a debt consolidation can be challenging.

    Debt consolidation is not for everyone. Often in order to qualify your credit needs to be acceptable since the institution lending the money will want some indication that you will be able to make the required monthly payments. If your credit rating is less than stellar it might be more prudent to consider some other alternatives. The more bruised your credit is, if approved, the higher the interest rate on the debt consolidation will be, which may leave you in no better shape than when you started.

    A smart way to determine how best to approach your ‘getting out of debt’ solution is to speak with a professional debt consultant, one experienced with helping Canadians find effective forms of debt relief. A consultant will be able to go through all of your financial obligations to help determine what means for getting out of debt are best suited to your unique situation. He or she will also be able to get the ball rolling and get you started on a debt-free road as well as help you to budget realistically for the future.

    If you are in debt that you feel is becoming tough to manage it is probably time to consider getting some help. Don’t wait until the debt takes complete control.

    For more information about debt consolidation or getting out of debt please contact DebtCare Canada by calling 1-800-890-0888 or visiting us online at www.debtcare.ca.

  • Summer Debt Relief: Tips to Reduce Your Debt

    Debt ReliefOver the summer many families find that debt rises with the temperatures; vacations, weekends away, daily outings, etc. can all leave the wallet feeling very light. If you entered the summer drowning in debt, the worst thing that you can do over the summer is add to that. Instead, use this time to make some financial changes and reduce you debt rather than continuing to build it up. Here are our summer debt relief tips to help you regain control of your finances.

    Debt relief tip #1: Go over your finances and set a budget. Look at how much you spend every month on bills and see where you can save. And be realistic. Don’t deny yourself every luxury – you won’t be able to stick to it. For example, if you eat out 5 nights a week, don’t cut this out altogether, you are bound to cave in at some point. Instead try and limit these treats to once a week, or even once every 2 weeks.

    Debt relief tip #2: Avoid making only minimum monthly payments. Most of your monthly payment is just interest, very little of the principle balance being paid off as a result. Check out your monthly statement – most will give you a timeline showing when your balance will be paid off if only monthly payments are made – this might shock you – and hopefully motivate you to reduce your debt!

    Debt relief tip #3: Contact your creditors and see if they can offer a lower interest rate, especially if you have received offers from other companies offering an interest free period and free transfer (just be sure that you can pay off the balance before the interest free period is up). This option though is often only good for those with good credit – if your credit is less than stellar or if you routinely miss payments, there isn’t much motivation for your creditors to reward you with a lower interest rate.

    Debt relief tip #4: Seek the help of a professional. Once you get deep into debt, it can seem impossible to climb back out. But it is possible. If you have tried to reduce your debt but just can’t seem to make any progress, it might be time to call in the professionals, ones with experience helping Canadians get debt relief. Debt consolidation, consumer proposals or bankruptcy are all viable options to reduce your debt, and can all end up significantly reducing the amount of debt you currently carry.

    Don’t let summer spending get away from you. Instead, try to reduce your debt instead of increasing it with these tips and others. For more tips about debt relief and how to reduce your debt over the summer, please contact DebtCare by calling 1-800-890-0888 or visiting www.debtcare.ca.

  • The Globe and Mail Reports on Canadian Consumer Debt

    Canadian Consumer DebtThe Globe and Mail recently reported on the status of Canadian consumer debt levels, stating that Canadian household debt continues to grow. With that said, individuals seem to be obtaining less credit and the Bank of Canada reports being less concerned about this debt than in years past.

    However, a report from Statistics Canada calculated the average household debt at $164.97 for every $100 of disposable income, slightly higher than the analysis from 3 months previous. And just because the head bank doesn’t seem too concerned, it does not mean that Canadian consumer debt levels are not at a record high – they are.

    It has become quite common over the past several years to hear these reports about Canadian consumer debt levels no matter where you go. If you are not in debt often these updates seem irrelevant and are easily pushed aside. However, if you are in debt these updates can often leave you stressed about your own financial situation.

    If you find yourself getting shaky or stressed out with each report like this one, it might be time to recognize that you need some help with reducing your debt. Instead of trying to ignore the signs that your debt is becoming unmanageable or hoping that if ignored the problem might go away (it won’t), why not consider working with a professional to get rid of your debt.

    How can a professional debt consultant help? After an initial consultation which will involve assessing your debt, your re-payment behaviours, and your monthly income, a debt consultant will be able to discuss with you the various options which exist to help you get out of debt. They can also help you to establish a budget that is realistic while at the same time focusing heavily on repaying the money that you owe to your creditors.

    Some options which may exist include debt consolidation, consumer proposal or making settlements with your creditors. All three of these solutions come with their own benefits and it pays to consult with a professional to best determine which option is the right one for you. Some might even offer the ability to settle what you owe with creditors at a much lower amount – saving you money.

    If you find yourself constantly trying to avoid the reports on rising Canadian consumer debt levels, change your perspective and start looking at it as a motivator to get your own debt under control.

    For more information about how you can reduce your debt, please contact the professionals at DebtCare Canada by calling 1-800-890-0888, or visit us online at www.debtcare.ca.