Struggling to clear your debts and wanting a fresh start? If you’re looking for a way to clear or consolidate your debts, you may be considering a debt consolidation loan. While taking out a loan is a form of debt consolidation in Edmonton, reaching out to a Licensed Insolvency Trustee (LIT) to explore your options can help you decide on the best option for your personal situation.
LITs are licensed by the Federal Government of Canada to administer Bankruptcies, Consumer Proposals, Receiverships and other insolvency services. With their professional advice, you can decide on the best form of debt relief for you. Perhaps it’s best to take out a debt consolidation loan, or you may find an alternative that suits your situation to clear your debts for a brighter future.
What is debt consolidation?
In simple terms, debt consolidation is the process of combining two or more debts into one monthly payment. Typically, it involves you taking out a loan and using it to pay off your smaller loans or debts. The aim of a debt consolidation loan is to reduce the amount of interest you pay. But it’s important to note that a debt consolidation loan is still a loan and will require a monthly repayment.
With this in mind, there are alternatives to taking out a debt consolidation loan that you can discuss with an experienced LIT. They’re trained and licensed by the federal government to provide Bankruptcy and insolvency services and advice.
What types of debt can I consolidate in Edmonton?
If you’re looking to combine your debts into one payment, it’s important to note the types of debt that can be consolidated into a loan. Some types of debt are not eligible for this debt relief option.
Debt that can be consolidated in Alberta
- Credit card debt
- Unsecured personal loan debt
- Non-government student loan debt
- Some medical bills
- Auto repossession debt
Debt that cannot be consolidated in Alberta
- Mortgages
- Auto loans
- RV loans
- Government loans
- Back taxes
Why should I talk to a Licensed Insolvency Trustee about debt consolidation?
If your debts feel unmanageable, working with an LIT can help bring some perspective and support to your financial situation.
LITs are the only federally regulated debt advisors in Canada, licensed by the Office of the Superintendent of Bankruptcy. They’ve been trained by the federal government to offer practical advice and support on ways to manage and clear your debt, and can deal with your creditors on your behalf.
So, before you make a decision on how you’re going to manage your debt, speaking with an LIT can help you to assess all options available to you. From there, you can decide if you want to take out a debt consolidation loan or whether a Consumer Proposal or even credit counselling would suit you best.
Should I take out a debt consolidation loan?
Whether you should take out a debt consolidation loan will depend on your personal, and financial situation.
Taking out a loan to consolidate your debts can reduce the interest you pay and you will only have one monthly payment. But taking out a debt consolidation loan can come with its disadvantages:
- To qualify for a debt consolidation loan, you may be asked to give some form of collateral like a high value asset. This means if you’re unable to make the loan repayment, you may risk losing your high value asset such as your home or car.
- If you have a credit score of less than 650, it may be hard for you to be approved for a debt consolidation loan.
- While your interest rates will be reduced, you will still have a large monthly payment to pay.
Alternatives to debt consolidation in Edmonton
Not sure if taking out a debt consolidation loan is the right choice? There are several debt relief options available. Talking to an LIT can give you the support and advice you need to decide on the best debt relief option for you.
Consumer Proposal
An alternative is a Consumer Proposal. It works similarly to debt consolidation, and lets an LIT work to arrange a settlement agreement with your creditors by combining your debts into a single monthly payment. Depending on the relationship you have with your creditors and other factors, your LIT may be able to put together a settlement arrangement that feels more affordable for you. You may end up repaying less than the amount you owe, stretch the full amount over a longer period or have the interest rate reduced.
Credit Counselling
Credit counselling in Edmonton can serve as a helping hand, to help you manage your spending and budgeting, and learn about credit management. If you’re looking for a way to reduce your debts, working with an LIT to assess your credit report and put together a monthly budget may get you on track to becoming debt-free.
Personal Bankruptcy
If you’re struggling to see a way out of debt and you’re unsure about taking out a loan to consolidate your debts, you may consider filing for personal Bankruptcy. Bankruptcy is a legal process designed to help free you from your debts. The only way you can file for Personal Bankruptcy in Canada is through an LIT. But filing for Bankruptcy can feel like a big decision, so talking through your options with an LIT can help you to decide on the best option for your situation.
Ready to say goodbye to your debts?
Here at Allan Marshall & Associates, we care about helping people just like you take control of their finances and become debt free. It’s never too late to seek help with your debts and improve your financial situation. With the help of one of our expert Licensed Insolvency Trustees, you’ll receive the advice and support you need to improve your financial wellbeing. Contact us today for a free consultation to discuss your debt relief options.
