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Some amount of debt is actually a good thing. After all, having a debt load that you are diligent about paying down with timely monthly payments is how you establish and build a good credit profile. Without some form of debt, you wouldn’t have an opportunity to establish a positive credit history.
But having too much debt can be debilitating. Unfortunately, many Canadians in Edmonton find themselves drowning in debt and unable to keep up with their bill payments. With continued missed payments, consumers can find themselves in hot water and end up in major financial turmoil.
If you’re struggling with your debt and want to avoid having to constantly deal with collections calls or even bankruptcy, it’s time to take action. Luckily, there are several options available in Edmonton to you to help you deal with your debt, and debt settlement is one of them.
Let’s go into further detail about debt settlement in Edmonton and whether or not it’s the right option for you.
How Does Debt Settlement Edmonton Work?
Debt settlement in Edmonton involves a debt settlement company that negotiates with your creditors to reduce the amount of money that you still owe them. By reducing your debt load, you’ll have less to repay, which can help alleviate the stress of your debt. Outstanding loan amounts can be effectively reduced by as little as 20% to as much as 80%, depending on the specific factors involves.
Debt settlement companies are experienced in convincing creditors to sympathize with consumers’ situations and are in an ideal position to get better offers to have your debt reduced than if you were to attempt to negotiate on your own.
Hiring a debt settlement company? Make sure to ask them these questions.
How Will Debt Settlement Impact Your Credit Score?
A common and valid concern among consumers who may be contemplating debt settlement in Edmonton is whether or not their credit scores will be negatively affected.
Debt settlement may impact your credit score, but it depends on your particular situation. Ideally, your creditors will cut down your outstanding debt as much as possible when settling it.
But the more debt that can be reduced, the more of an effect it could have on your credit score. Having said that, the person representing you will work on your behalf to get you the best offer from your creditors so that your credit score won’t be affected as much.
Consider this: if your debt load is so high that you can’t pay your bills on time, your credit score will most certainly be negatively affected. But if you can reduce your debt load to a point that you’ll be able to make your payments in a timely fashion, then your credit score can actually be positively impacted.
Interested in what other factors affect your credit score? Click here to find out.
Are You a Candidate For Debt Settlement?
Before you decide to opt for debt settlement, it’s important to carefully consider your situation first to make sure you’re making the right choice. Debt settlement is best suited for consumers in Edmonton who:
- Have a minimum of $10,000 in unsecured debt
- Are unable to afford minimum monthly credit card payments
- Are receiving collections calls
- Want to avoid bankruptcy
- Can’t get ahead financially
- Are going through personal or financial predicaments
Secured Vs. Unsecured Debt
Not only should you consider your own situation before opting for debt settlement in Edmonton, but you will also need to consider the type of debt that you need to be settled.
Debt settlement cannot address all forms of debt in Edmonton and Canada, in general. More specifically, debt settlement cannot deal with most forms of secured debt. Instead, this program is more geared toward dealing with unsecured debt. But what’s the difference between the two?
Secured debt refers to any loans that are backed by collateral. Usually, a valuable asset collateralizes the loan, such as a house or a car. Unsecured debt, on the other hand, refers to debt that is not collateralized by any valuable asset. Here are a few examples of each.
Secured Debt in Edmonton
- Car loans
- Title loans
Unsecured Debt in Edmonton
- Credit cards
- Payday loans
- Unsecured personal loans
- Student loans
- Medical bills
How Can Debt Settlement Help You With Your Debt?
Rather than begging your creditors to reduce your debt load on your own, a debt settlement representative will negotiate for you. This will help to increase the odds of things working out better in your favour, as these experts are skilled at negotiating in situations like these.
With a debt settlement program, your situation and loans will be carefully assessed by a debt settlement professional. Your financial situation will also be considered to determine how much you can realistically afford in payments.
With this information in hand, your debt settlement representative will ensure that you have enough to make a lump sum offer and will negotiate with your creditors to see if they would be willing to accept a reduced overall debt load. Your representative may even try to negotiate a lower interest rate to make whatever outstanding amount you have to pay back more affordable.
Read this to learn some ways of conquering your high interest debt in 2019.
Pros and Cons of Debt Settlement
While debt settlement can help, it’s important to understand the pros and cons of such a program.
- Reduce your overall debt load
- Lower the interest rate on your debt
- Help you better manage your finances
- Reduce your debt-to-income ratio (DTI), which can help improve your credit score over time
- End collections calls
- Debt settlement will be noted on your credit report and will remain there for a while
- Your ability to secure a loan in the near future may be affected
- Risk of adding more debt if you’re not responsible
Want to learn how to create a debt repayment plan? Take a look at this infographic.
Are There Any Alternatives to Debt Settlement in Edmonton?
Debt settlement in Edmonton might not be right for you, and if that’s the case, there may be other options that you’d like to explore, including the following:
Credit counselling – While this might not settle your debt for you, it can help you get better educated on changes that you might want to make in your financial life to alleviate your debt issues. A credit counsellor will sit with you and help you create a workable budget and guide on what you can do to improve your debt situation and even improve your credit score.
Read this for more information about credit counselling.
Debt consolidation – If you have many debts – including high-interest debt – you might be able to make them more affordable by consolidating them all into one single debt payment. Debt consolidation works by taking out one large loan to pay off all other loans. Usually, the larger loan will come with a much lower interest rate compared to your highest-rate debt, which can help you save money in total interest paid and make it easier to manage one bill instead of several.
Consumer proposal – The last resort before filing for bankruptcy is a consumer proposal, which basically involves asking your creditor if they would be willing to forgive your debt – either in whole or in part. You may be able to come up with an agreement whereby you pay part of what you owe to your creditors after preparing and submitting a consumer proposal with the help of a Licensed Insolvency Trustee.
Bankruptcy – If all other options have been exhausted, bankruptcy is the last thing you can do to alleviate your debts and stop the harassing collections calls. With bankruptcy, you agree to surrender many of your assets in order to be free of much of your debt. It should be noted that your credit score will be affected for at least seven years, making it nearly impossible to secure credit during this time frame.
Discover more ways of conquering your high interest debt by clicking here.
Is Debt Settlement the Right Choice For You?
If you’ve carefully assessed your financial situation and determined that debt settlement Edmonton can help you effectively deal with your debt, then get in touch with a debt settlement company to get the ball rolling. To find the right debt settlement representative for you, Loans Canada can help. Call today to get help settling your debt and finally improving your financial health!