With breathtaking natural beauty, plenty of outdoor activities, and a moderate climate, Victoria is a stunning place to call home. But the cost of enjoying life on the island is not cheap. If you’re trying to manage multiple debt payments each month and you want to simplify the repayment process, you might consider debt consolidation.
To see if Victoria debt consolidation is the right solution for you, reach out to a Licensed Insolvency Trustee (LIT) at Allan Marshall & Associates today.
What is Debt Consolidation?
Debt consolidation is a financial process that involves combining multiple debts into one monthly payment. There are several methods you can use to consolidate your debt but the general idea is to use one large loan or credit card to pay off your smaller debts.
What Are The Benefits of Debt Consolidation?
If you’re having a hard time managing multiple debts and you want to avoid a late or missed payment, debt consolidation might offer the benefits you’re looking for.
- Simplify debt repayment. With multiple credit cards or loans come multiple lenders, payment deadlines, and interest rates. Trying to keep track of everything can feel overwhelming. When you consolidate your debt, you only have to worry about one monthly payment with one lender and a single interest rate.
- Lower monthly payment. When consolidating your debt, the goal is to secure a lower interest rate than the ones you are currently paying. A lower rate can help to reduce your monthly payments and free up money for other expenses.
What Are The Risks of Debt Consolidation?
Most decisions in life come with pros and cons. Before deciding if debt consolidation is right for you, you should also consider the risks.
- Temporary reduction to credit score. When you apply for a consolidation loan, you might see a temporary dip in your credit score. When you take on any new credit product, the lender will typically perform a hard credit check, which can negatively impact your credit score. However, the potential long-term benefits of debt consolidation will usually outweigh the small impact on your credit score.
- Going deeper into debt. The risk of debt consolidation is that you take on a new loan or credit card to pay off your current debts, and then continue to use the credit cards you just paid off. This can result in racking up even more debt.
Debt Consolidation Strategies
When it comes to how you can consolidate your debt, there are several strategies to consider.
Debt consolidation loan
A debt consolidation loan is specifically designed to help you consolidate your debt. You can look for a consolidation loan at a bank, credit union, or other financial institution.
To qualify for the best consolidation loans, you typically need a good to excellent credit score. If you have a limited credit history or a poor credit score, you might find it difficult to secure an interest rate lower than what you’re currently paying. You also want to ensure you qualify for a loan large enough to pay off your smaller debts.
Debt settlement
A debt settlement company can negotiate with your creditors on your behalf to try and reduce the amount you owe. If your creditors agree to the offer, you have to have a lump sum payment ready to go.
Before working with a debt settlement company, know that your creditors do not have to negotiate your debt. A debt settlement program is entirely voluntary. If your creditors don’t negotiate, you may still have to pay the debt settlement companies fees. This could put you in a worse financial position than when you started.
Both debt settlement companies and some credit counselling companies offer debt settlement programs. Before working with a debt settlement company, do your research. You can use the Better Business Bureau (BBB) to look for any red flags. You can also visit your provincial or territorial consumer affairs office to see if the company is legitimate.
Consumer Proposal
If you are at a point where you are insolvent and can no longer pay your debts, you might consider a Consumer Proposal. A proposal is a legal debt relief process that can only be administered by a Licensed Insolvency Trustee.
In a Proposal, you and your LIT present an offer to your creditors to pay a percentage of your debt, extend the time you have to pay, or both. If your Proposal is accepted, you have up to five years to pay back your debt. As soon as you enter into a Consumer Proposal, all creditor lawsuits, collection calls, and wage garnishment will stop immediately.
Victoria Debt Consolidation – Speak to an LIT Today
If you’re thinking about consolidating your debt, but you’re unsure if it’s the right option for you, contact a Licensed Insolvency Trustee. At Allan Marshall & Associates, our debt expert team can assess your debt and recommend the best solution. For a free no-obligation consultation, give us a call at 1-888-371-8900, or contact us online.
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