Living with debt can put stress and pressure on many aspects of your life. If you’re looking for a way to manage your debt, you may be considering a debt consolidation loan in Alberta. While these loans are a popular way to manage your debts, there are other options to consider to move towards a fresh start.
You can assess all your debt relief options with the help of a Licensed Insolvency Trustee (LIT) in Alberta . LITs are experts in offering debt support and advice, to help you decide on the best route forward to becoming debt-free. If you’re looking to consolidate your debt, there are other options available such as filing a Consumer Proposal, or attending credit counselling to get your finances back on track.
LITs are licensed by the Federal Government of Canada to administer Consumer Proposals, Bankruptcies, and other insolvency services. They’re also trained credit counsellors to help restore your financial confidence. With their advice, you can decide on the best route forward for your situation. Perhaps you’ll choose to take out a debt consolidation loan, or you may find an alternative way to consolidate your debts and improve your financial wellbeing.
What is Debt Consolidation?
Debt consolidation involves you taking out a new loan to pay off a number of smaller loans, debts or bills that you’re currently making repayments on. By doing this, you’re effectively combining all your individual loans into one pot, with one monthly payment. As you’re bringing multiple debts together and combining them into one loan, this is known as “consolidating” them.
To consolidate your debts, you would need to get a new, larger loan and use that money to pay off all the smaller loans. The aim of this is to reduce the interest you’re paying on your individual debts, by only having one loan payment to make each month.
Alternatives to a Debt Consolidation Loan
If you’re unsure if a debt consolidation loan is the right choice for your situation, there are several debt relief options to help you manage your debts. By talking through your options with a LIT, you’ll receive the advice you need to make a decision that is best for your personal situation.
Credit counselling in Alberta is a way for you to restore your financial confidence, by receiving education and support on all money matters. LITs are also trained credit counsellors, there to help you put together a monthly budget, assess your credit report and reduce your debts. If you’re looking for guidance on your spending, credit counselling can be a way to avoid Bankruptcy by helping you put healthy, long-lasting financial habits in place.
A Consumer Proposal can be a suitable alternative to taking out a debt consolidation loan. Working similarly to debt consolidation, your LIT will arrange a settlement agreement with your creditors by combining your debts into a single monthly payment. Usually, you will pay a monthly payment over a certain time period no longer than five years.
Your LIT may be able to put together a settlement arrangement that feels more affordable to you, as long as your creditors accept the proposal and you are eligible. You may end up repaying less than the amount you owe, stretch the full amount over a longer period or have your interest rate reduced.
If you’re struggling to see a way out of debt, you may be considering filing for Bankruptcy in Alberta. Bankruptcy is a legal process designed to help free you from your debts, and has advantages and disadvantages. The only way you can file for Personal Bankruptcy in Canada is through an LIT. Before you come to a decision, it may help you to discuss your options with an LIT who will help assess your personal situation.
Should I take out a debt consolidation loan?
Not sure if a debt consolidation loan is the right choice for you? Here are some factors to consider:
- Interest rate: If you choose to take out a debt consolidation loan, you will need to make sure that the new loan has a lower interest rate than the average interest rate you are currently paying on your debts.
- The loan amount: For a debt consolidation loan to work, the new loan needs to be a large enough amount to pay off all your unsecured, high-interest debts.
- Collateral: You may need to give some form of collateral for a debt consolidation loan. This may mean that the loan is secured to a valuable asset like your home or your car. If you find yourself unable to make your loan payments, you will risk losing your valuable asset.
Why should I talk to a Licensed Insolvency Trustee about debt consolidation?
If your debts feel unmanageable, you may be considering a debt consolidation loan that can help you repay the money you owe. If you’re unsure what route to take to clear your debts, talking through your options with an LIT can take some weight off your shoulders. Here are some ways talking to an LIT about debt consolidation can help you:
LITs understand how debt can affect your quality of life. They’ve been granted their license from the Office of the Superintendent of Bankruptcy (OSB) to offer professional advice on Bankruptcy and insolvency. When talking to an LIT, you know you are dealing with a professional who will offer you unbiased, professional advice to help you settle your debts.
Dealing with your creditors
If you decide a debt consolidation loan won’t suit you and choose to file a Consumer Proposal or decide personal Bankruptcy is the right option for you, your Trustee will deal with your creditors directly on your behalf. This will take away the anxiety caused by creditors contacting you for debt repayments. Any unsecured creditors will no longer be able to contact you for debt collection or take legal action against you.
Ready to say goodbye to your debts?
At Allan Marshall & Associates, we’ve been helping people to manage their debts since 1979. Our Licensed Insolvency Trustees can support you on your journey to becoming debt-free. Contact us today for a free consultation to discuss your debt relief options.