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Once your debt gets out of hand, it can be very difficult to resolve the situation and still have money left for your other essential expenses in Nova Scotia. Unless you find a solution, you may be stuck in debt for years, which results in all sorts of damage to your credit and finances.
If this is what you are currently dealing with, there are plenty of debt management products and options available to any Nova Scotia credit user. One of those options is debt settlement, keep reading for everything you need to know.
While debt settlement can be beneficial, it does come with some disadvantages that you may not be comfortable with, which we’ll discuss further below. So, before you decide to settle your debts in Nova Scotia, consider the following alternatives:
While this isn’t an option for everyone, getting your friends or family to help you might save you a lot of financial hardship. Just make sure you can afford to pay them back someday to avoid any personal problems between you and them.
If you’ve built up some home equity by paying down your mortgage or increasing the value of your home, you may be able to get approved for a home equity loan or a HELOC (home equity line of credit). You can then consolidate your debts and pay your home equity back over time. However, only choose this option if you’re certain you can make all your payments on time and in full, as home equity products are secured against your home.
Click here to learn how to borrow using your home equity.
When your debt is becoming unmanageable, you can also consider either a debt consolidation loan or program. A debt consolidation loan allows you to rectify all your other outstanding debts at once, leaving you with one monthly payment and interest rate to deal with. A debt consolidation program is a similar payment method, only you’ll be working with a certified credit counsellor in Nova Scotia, who will help you contact your lenders and get the job done. However, once again, failing to keep up with your payments may result in worse debt problems, so consider this before you apply.
Need help making a plan to tackle your debt? Click here.
Both these options are legally binding processes in Nova Scotia which are put in motion by a licensed insolvency trustee and will prevent any debt collection efforts, wage garnishments, or other legal actions against you.
A consumer proposal in Nova Scotia is when your trustee negotiates with your lenders for you to pay them back over several years through equally divided installments, which you’ll make toward your trustee. A bankruptcy, on the other hand, allows you to be completely debt free, often leaving you with surplus income payments toward the court itself.
While both these debt solutions may sound appealing, there are by far the most drastic and should only be considered when you have no other choice. That’s because they can be hard to qualify for and, if accepted, both options have a severe negative impact on both your credit score and finances that can last for years following completion.
How long does information stay on your credit report? Find out here.
Let’s say none of the above options work for you. A debt settlement is an agreement that you’ll strike with your lenders, wherein you would be able to settle your debt at a smaller balance than you actually owe. If the settlement is accepted, you can pay your lenders back through a lump sum payment. You can negotiate a debt settlement in one of two ways:
It is often possible to negotiate a debt settlement without any outside help. If you choose this route, you’ll have to prove to your lenders that you don’t have the capacity to pay them back in full. It’s also recommended to speak to a professional credit counsellor or financial advisor in Nova Scotia before you decide to do this. Consider these facts:
For more information about negotiating a debt settlement on your own, read this.
If you can’t negotiate a debt settlement by yourself or you would prefer the help of a professional to ease the process along, there are debt settlement companies in Nova Scotia that exist specifically for that purpose. Instead of you going through the motions alone, the company can negotiate with your lenders on your behalf and facilitate a settlement that’s fair for all parties involved. If you’re applying with a debt settlement company, however, be sure to do some research in advance because:
Take a look at these other Canadian financial scams.
As we mentioned, there are certain elements that make debt settlement beneficial for your financial situation and others that may make it worse.
Trying to qualify for a debt settlement? Here’s how you can do it.
If you’ve decided that hiring a debt settlement company is the best course of action, there are a few questions that you should ask them, including but not limited to:
Looking for more information about credit scores? Take a look at this infographic.
As we said, one of the main disadvantages of a debt settlement in Nova Scotia is that it will have a significant negative impact on your credit score. That impact can make it pretty difficult to be approved for credit products at affordable interest rates, at least until your debt settlement is finished. In fact, any large amount of damage to your credit score can take months of effort to alleviate.
To learn more about the impact a debt settlement has on your credit, read this.
However, it’s best to look on the bright side, which is possible when you consider the positive effect of the debt settlement process, namely that you’ll likely be out of debt faster than you would be if you tried to consolidate your debts on your own. Once your debt is eliminated, you can get swiftly back on track toward improving your credit. After all, it’s far better to have bad credit for a little while than to be stuck in a cycle of debt for what could be the rest of your life.
Looking for a bad credit loan in Nova Scotia? Check this out.
At Loans Canada, our mission is to help you deal with your debt by whatever means necessary. If you’re looking for debt settlement in Nova Scotia, our team is here for you. Apply with us today or contact us for more information.
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