The unfortunate reality is that a number of people struggle with getting their debts under control. Whether because of credit accumulation, student loans, vehicle financing, or a career setback, there are a number of reasons why someone from any economic or educational background could suffer from debt.
If you are one of these people stuck in a financial free fall, then it’s time to take a deep breath and consider your options – one of them being debt consolidation. Debt consolidation is when you combine multiple debts into one monthly payment. The benefits of debt consolidation are numerous – keep reading to find out why.
A Helping Hand
If you work with a certified Credit Counsellor when consolidating your debt, you’ll have someone to guide you along the process and take care of every detail. They will work with you to create a repayment program with a specific end date, as well as scheduled monthly payments. They’ll even round up your unsecured debt, negotiate with your creditors to lower the interest rates or drop them down to zero, and stop collection calls.
Payments can be made automatically via telephone banking, debit card, or money order, and includes full tracking. Once you send in your monthly payment, it gets distributed to each of your creditors. With the help of your Credit Counsellor, you can rest easy knowing that someone is on your side representing your best interests.
Build a Healthy Financial Future
Once you consolidate your debt and choose to work with a certified Credit Counsellor from a non-profit credit counselling agency, you’ll only have to deal with them directly and you won’t have to talk to a single creditor. But a Credit Counsellor won’t just manage your debts – they’ll also help you build a more secure financial future. They are financial experts and can teach you how to:
- Track your spending and gain insights into spending habits, so you can determine where you should cut back.
- Build a monthly budget that works for you and your goals. A budget will help you grow your savings as well as build an emergency fundso that you’re less likely to rely on credit cards in the future.
- Set financial goals. Whether you want to move into a new home, help a child through school, or save for retirement, your Credit Counsellor can help set realistic goals and teach you how to achieve them.
Their goal is to make sure that when you do get out of debt you won’t fall right back into a bad situation – instead, you’ll come out on top with a sound financial management plan.
Bankruptcy Isn’t a Better Option
There’s a common misconception that filing for bankruptcy will bring you back to a “blank state” and clear up your finances. This isn’t really the case, though. Bankruptcy kills your credit, takes your non-exempt assets like RRSP contributions, and seizes any equity that you have – if you don’t have a home, it makes it more difficult to get a mortgage in the future. There are administrative fees and additional payments may be required based on your income.
At the end of the day, it’s just not worth it. Instead, choose to consolidate your debt and build a better future with the guidance of a certified Credit Counsellor.