Surrey, British Columbia is a popular alternative to living in Vancouver. Residents have the same mild climate, beautiful scenery and access to similar amenities as Vancouver residents, but with a lower price tag.
However, Surrey is still one of the most expensive cities to live in. Because of the high living costs, many residents struggle with debt. Fortunately, in Surrey, debt consolidation and other options are available to Canadians in need of debt relief.
Dealing With Debt
Life happens and you may end up carrying more debt than you can handle for a number of reasons. You might have had to borrow to cover emergencies, consumer purchases, medical expenses, or to make ends meet due to cost of living increases. If you live in Surrey, debt consolidation is one option that can help you manage your payments. It can reduce interest costs, and help you get out of debt. Let’s look at some of the best ways to help you deal with your debt in Surrey.
Surrey Debt Consolidation Loans
Debt consolidation loans can work well if you’re juggling multiple payments with high interest rates. A debt consolidation loan will pay off your debts. It combines your debt into one loan, so you only have one payment.
Typically, you must apply to a lender for a consolidation loan. Before they approve you for the loan, the lender usually wants to confirm you have a stable source of income and a good credit score. They may require you to use an asset to secure the loan. Common assets used to secure a loan are the equity in your home or investments. There are several ways you can consolidate your debt:
A secured or unsecured loan: A debt consolidation loan is for a fixed amount to pay off some or all of your unsecured debt. You’ll make loan payments until the loan is paid off. These loans typically take one to five years to pay off. Consolidating your debt into one loan can be helpful since you won’t have to keep track of multiple payments. The interest rate can be lower than on credit cards or lines of credit. Another benefit is you’ll be debt-free by a specific date if you make all your payments on time.
A mortgage: A lender may be able to use your home’s equity for debt repayment by combining your debts with your mortgage. You’ll have one payment for your mortgage and the debts included in the mortgage.
The interest rate is usually lower than unsecured loans. However, mortgages can take up to 30 years to pay off. So, while consolidating your debt into your mortgage offers a simple payment solution at a lower rate, the debt you consolidate can cost more in the long run if you take decades to pay it off.
A home equity line of credit (HELOC): If you have equity in your home, your lender may be able to use it to secure a line of credit. You can use the secured line of credit to pay off your debts and make one monthly payment. Lines of credit require a minimum payment. There usually is no time limit to pay it off.
A HELOC can be a good consolidation strategy but you need to make more than the minimum payment to get out of debt. In most cases, making only minimum payments won’t eliminate your debt. Minimum payments can keep you making payments indefinitely.
A credit card balance transfer: Many credit cards offer the option to transfer your balance for a very low introductory rate. You may have to pay a balance transfer fee that they add to your debt. There is no time limit to pay off a credit card balance transfer. However, if you still owe money when the rate expires, the rate can increase to 20% or more.
Consolidating your credit card debt will give you one payment to manage. It can also lower your interest rates but qualifying for the loan can be challenging. You may not get approval if you have a bruised credit rating or your income doesn’t support the loan.
Another possible pitfall is not managing your spending after lowering your interest rate. It’s easy to keep borrowing if you only have one payment to manage. Continuing to borrow could put you in a more difficult financial situation than before you consolidated your debt.
Credit counselling is an option if you are still determining the best way to manage your debt. It can also be helpful if your credit score is keeping you from getting a consolidation loan. Licensed Insolvency Trustees (LITs) and non-profit credit counselling agencies offer credit counselling. Be sure to research any credit counsellor you intend to use. Some charge high fees, and they have no power over your creditors.
Debt management plan
This plan combines all your credit card debt into one lump sum. It can include other unsecured debts as well. Your interest rate can be significantly reduced, sometimes to zero. You make one monthly payment to your credit counsellor based on your budget. Your credit counsellor uses the money to pay your creditors.
Creditors must agree to accept the debt management plan. They can reject it if they choose. A debt management plan will hurt your credit score.
A debt settlement is an agreement you or a debt settlement company negotiate with your creditors. You agree to pay a portion of your debt in a lump sum, and they agree to write off the rest.
If you choose this option, there are several things to consider. A debt settlement may affect your credit rating. Debt settlements do not offer legal protection from creditors. If you hire a debt settlement company, they will charge fees and may refer you to a LIT.
You can go directly to an LIT without having to pay unnecessary fees. The first consultation with an LIT is usually free. The services they offer are legally binding, which protects you from collection activities by your creditors.
A Consumer Proposal is for unsecured debts of up to $250,000. It’s a legally binding agreement between you and your creditors. It’s a government-approved program, and the government oversees Consumer Proposals through the Office of the Superintendent of Bankruptcy (OSB). Only a Licensed Insolvency Trustee can submit a Consumer Proposal to your creditors.
This option can reduce your debt significantly. It will combine all your debt payments into one. You have up to five years to pay off a Consumer Proposal. Additionally, you can keep your assets if you file a Consumer Proposal. It offers legal protection from your creditors, but you must make your payments. It also affects your credit rating, but not as much as a Bankruptcy will.
Bankruptcy isn’t debt consolidation. It’s a way to get rid of the unsecured debt you owe. If other debt consolidation solutions aren’t possible, Bankruptcy might be a good way to eliminate your debt.
Bankruptcy has some things in common with a Consumer Proposal. First, it’s a government-approved program and subject to the rules of the OSB. Second, you’ll need a LIT to file for Bankruptcy on your behalf. It also offers you legal protection from creditors, just as a Consumer Proposal does, and only deals with unsecured debt.
Filing for Bankruptcy doesn’t reduce your debt. Instead, it eliminates it. You don’t make debt repayments when you file for Bankruptcy, but you do need to make monthly payments to pay for the cost of filing. Your assets are not necessarily exempt from your creditors with Bankruptcy. Every province has a list of assets you can keep if you file for Bankruptcy. Filing for Bankruptcy will negatively affect your credit score. It will usually stay on your credit report for six years after your Bankruptcy discharge.
Debt Help in Surrey
If you are struggling financially in Surrey, debt consolidation could be the answer to get you back on track. But there are other debt relief programs in Surrey that might be better able to meet your needs. Talk to us today about your debt and we will help explain all of your options.
Our LITs at Allan Marshall and Associates have the experience and knowledge to find the best solution for your debt. We understand the stress that too much debt can cause, and we’re ready to help you get a fresh start. Call Allan Marshall and Associates today at 1-888-371-8900 for a free consultation so you can get back to living your best life in Surrey.