Vancouver is a vibrant city surrounded by nature and connected to the Pacific Rim. Ranking as one of the most liveable cities in the world in 2022, it’s no surprise that so many people want to call Vancouver home.
One challenge residents find, however, is the high cost of living. Vancouver is Canada’s second most expensive city, and many residents are finding it difficult to keep their heads above water. If you live in Vancouver and are struggling with debt, debt consolidation could be one of several solutions available to help you.
Having debt isn’t always a problem. If you can easily make your payments on time, your debt may simply be a part of life. There are several warning signs to be aware of, that your debt is becoming a problem:
- You’re behind on some or all of your debt repayments.
- You can’t make all your payments when they are due, so you miss some to pay others.
- Creditors are calling you for payment.
- You make your payments, but your debts aren’t going down.
- You continually borrow to cover your living expenses and credit payments.
The good news is that there are solutions to help you deal with your debt. Here, we’ll look at different debt relief programs in Vancouver, including debt consolidation loans, credit counselling, debt settlement, Consumer Proposals, and Bankruptcy.
Debt consolidation loans
A debt consolidation loan is a loan you use to pay off your debts. It can pay off credit cards, lines of credit, personal loans, payday loans and other unsecured debt. Consolidating your debt into a single loan gives you one payment to manage. Having only one payment can simplify your finances.
The loan term is usually between one and five years. The interest rate on the loan can be lower than what you are paying on your existing debt. Once you make all your payments, you’ll pay off the loan by the end of the term.
There are several ways you can borrow to consolidate your debt. The most common are:
- A loan that is unsecured or secured with an asset like your vehicle.
- Combining your debt into your mortgage.
- A Home Equity Line of Credit.
- A balance transfer to a credit card with a low introductory rate.
Lenders typically require an application for credit if you want to consolidate your debt. They will want proof of income to ensure you can manage the loan payment. Most lenders will also check your credit score. You may not qualify for a consolidation loan if your credit score is low. Check with your bank to see if you qualify.
Credit counselling can be helpful if you aren’t sure of the best way to handle your debt. It can also help if you don’t qualify for a consolidation loan. You can find credit counselling through Licensed Insolvency Trustees and credit counselling agencies.
Licensed Insolvency Trustees offer credit counselling and government-approved solutions to help you get out of debt. They are experts in debt management, provide legal protection from your creditors, and will help you find the best solution for your situation.
Credit counselling agencies offer debt help as well. Some are non-profit, and others are for-profit. These agencies can help with budgeting and offer some debt repayment programs. If you choose a credit counselling agency, research the agency to ensure it’s reputable and the fees are reasonable. It’s important to note that credit counselling agencies do not offer legal protection from your creditors.
A debt settlement is an agreement you negotiate with your creditors. You offer a lump sum payment that is less than you owe. If your creditors accept your offer, they will write off the rest of your debt.
You can hire a debt settlement company to do this for you. These companies typically charge high fees, cannot guarantee results, and offer no legal protection from creditors. They may refer you to a Licensed Insolvency Trustee (LIT) if they cannot help you and will often charge a referral fee. You can skip this fee by going directly to an LIT without a referral.
Some challenges with debt settlements are:
- Your creditors do not have to accept your offer.
- You need to have the money to make the settlement payment.
- Creditors can negotiate a higher settlement amount.
- You don’t have legal protection from your creditors.
- Debt settlements can hurt your credit rating.
A Consumer Proposal is a government-approved program that can reduce the amount of debt you owe and stop the interest on your debt. A Consumer Proposal allows you to keep your assets and provides legal protection from creditors.
You need a Licensed Insolvency Trustee (LIT) to file a Consumer Proposal for you. Once it’s filed, collection calls, wage garnishments, and legal action stop. You’ll have a payment you can manage, and your creditors will get back some of their money.
As part of the agreement, you make a payment to your LIT every month. Your LIT distributes your payments to your creditors. You can have up to five years to pay off your Consumer Proposal. You’ll be debt-free after you make your last payment.
Filing for Bankruptcy may be your best option, depending on your unique financial situation. But often, you do not know this until you have spoken to a LIT. Like a Consumer Proposal, Bankruptcy is a government-approved debt relief program for unsecured debt. You need a LIT to file for Bankruptcy for you.
The government allows you to keep some assets when filing for Bankruptcy and the province you live in determines the assets you can keep. When you file for Bankruptcy, you must make a series of payments to your LIT to cover the fees of filing. Typically, for a first time filing, you will make 9 payments over 9 months. Once you complete your Bankruptcy, your debts are written off, and you are debt-free.
Debt Consolidation Help in Vancouver
Regardless of how much you owe, debt payments can be stressful. At Allan Marshall and Associates, our experienced team of LITs will work with you to find the best solution for your debt. Please call us for a free consultation at 1-888-371-8900 so you can deal with your debt and get back to living your best life in Vancouver.