How To Get Out Of Debt In Canada

by Guest on April 24, 2012

Living a life burdened by debt can be a daily challenge. If you are living with a heavy financial burden, you know how challenging each and every day can be. You may make daily decisions about whether to pay a credit card payment or buy groceries for your family. You may be getting letters from collections agencies, or perhaps you have been turned down for a loan request recently because your credit rating is poor. As challenging as living with financial issues can be, it can be even more challenging to get out of debt. If you have tried to pay off your account balances on your own without success, there are a few different options that you can consider.

Debt Settlement

Debt settlement  is one option to consider to get out of debt. Through this process, you will work with a professional financial negotiator. The negotiator will contact each of your creditors on your behalf to negotiate a reduction in your outstanding balances. In some cases, the reduction can be significant. In addition to reducing account balances, this process often results in restructuring of payment terms. The interest rate may be reduced, and additional loan fees may be waived or avoided. Typically, creditors will only agree to reduce your account balances if they receive a lump sum payment immediately. Because of this, many debtors need to either obtain an equity loan on their home or save money for a period of time before they can settle their balances. Because account balances are reduced or settled without paying the money back in full, this process can result in a negative event on a credit report. However, despite this, it is an ideal financial solution for those who are struggling financial and want to avoid bankruptcy.

Debt Consolidation

Another option to consider for financial relief is debt consolidation. Through this effort, account balances are transferred from their current account into a single account. The new account generally will have more attractive repayment terms. For example, it may have a lower interest, a fixed payment term or both. The amount of money owed will not be reduced immediately. However, the total monthly payment may be reduced, and principal may be paid down more quickly. This strategy can ease the financial burden of high monthly payments immediately and result in a more rapid reduction of balances over time. With a fixed term consolidation loan, the balance will be paid off at the end of the loan term. This is a more popular financial solution as it allows you to reduce account balances over time and without creating a negative event on your credit report.

The Best Results

For some individuals, settling debts may be more feasible and beneficial than a consolidation loan. For other individuals, the reverse may be true. You should carefully review your financial situation to determine which of these methods is best suited for you. It may be helpful to seek professional advice from a financial expert. Both methods have their benefits, but some may provide greater benefits to individuals in certain situations.

Debt can be a true burden that can weigh your life down. It can be a source of stress and anxiety for you, and it can prevent you from leading the life you want to lead. Through these solutions, you may be able to rid yourself of this burden more easily.

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