Shunning Credit Consolidation To Return To Financial Solvency

By Author: mohanchen
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When credit card debt runs amok in your life it can lead to a variety of different complications that can be catastrophic. From not being able to afford healthcare to not being able to put your children through college having debt can be a crippling situation. In Canada there are a couple methods that can be utilized to find your way out of debt and each should be considered carefully. The two main options for bringing all of your debt into a single amount with a single monthly payment are the consumer proposal, and the credit consolidation.
Using credit consolidation at first glance appears to be a great solution to finding your way out of credit card debt however; there are some important things to consider: When going the route of debt consolidation you are taking out a second loan from a lender that pays off all of your debt; you are exchanging many creditors for a single creditor. While your monthly payments might be lower with debt consolidation you will pay longer and in the ...
... end pay more. Using a consumer proposal does not transfer your debt to anyone, instead it brings all of your debt together, lowers it and then creates one monthly payment that is less than what you currently pay monthly.
When negotiating a consumer proposal all of your creditors are encouraged to lower the amount you owe and in most cases they will. Once your total debt has been bartered down you will agree to a lowered total debt and then begin to make payments. Each payment in most cases will account for 2% of your debt, enabling you to pay down your debt in a reasonable amount of time.
Having this opportunity is unique to Canada; it is not an option in other countries such as the United States. In order to qualify for this course of action you must have a minimum of 5,000.00 unsecured debt or a maximum of 250,000.00 unsecured debt. Unsecured debt is any debt that is not directly tied to collateral such as a mortgage.
Being free of debt or actively working to rid yourself of it is an great feeling. Chiseling your way out takes some time but in the end you will be able to take your life back and:
• No longer receive harassing phone calls to collect debt you owe
• Be able to restore your credit rating
• Qualify for a nicer apartment

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The prospect of contacting a debt consolidation Canada company and taking out a debt consolidation loan may be tempting to some, however, the process of negotiating a lowered settlement not only saves time and money, but it also reduces the possibility of defaulting on another loan.