Living in Ontario comes with a lot of great benefits and with it being the most populous province in the country, a lot of people take advantage of these benefits. Unfortunately, on the other hand, living in Ontario is often very expensive and as a result, consumers may be tempted to rack up a lot of debt in order to make life a little bit easier.
However, debt that gets out of control can be a big problem. So much so, that many consumers in Ontario end up requiring outside assistance to help them get out of debt. When this happens, there are several different debt relief options to choose from, with one of the most popular being debt settlement.
Will debt settlement affect your credit score? Find out here.
How Does Debt Settlement Work in Ontario and What to Expect?
A debt settlement in Ontario is essentially when you make an offer to your creditor to try and pay off a portion of your debt, to eliminate it completely. For example, if you owe $20,000, but feel you will be unable to pay it back, you might make an offer to settle the debt for $12,000. Of course, your creditor doesn’t have to negotiate or settle at all, but many will as getting something back is better than nothing. So while you can be optimistic, you should never automatically expect that the settlement will be accepted.
Debt settlement is often done through a debt settlement company, who will work with you to try and get your debt settled for less. They will handle all communication with your creditors, and while it is possible to do a DIY debt settlement, this often isn’t the best option for many people in Ontario.
The process of debt settlement in Ontario will begin by first reaching out to a debt settlement company. A bit later in this blog post, we will look at how to best choose a debt settlement company. Once you have selected a company to work within Ontario, you will often be required to get them up to speed on your financial/debt situation, and then they will work alongside you to come up with an offer to creditors. Also, you should expect to pay some fees to your debt settlement company, as it isn’t often a free service.
Check out this infographic to learn how you can create your own debt repayment plan.
Secured vs. Unsecured Debt in Ontario
However, you should be aware that not all types of debt will be able to be settled. Most unsecured debt will be able to be settled, but secured debt is not. This is important to know as you don’t want to waste your time and money trying to settle your secured debt. In case you are a little unsure about what secured debt is and what unsecured debt is, we have created a handy guide for you to check out.
For a more detailed look at secured vs. unsecured debt, check this out.
Secured Debt
Secured debt is any sort of debt that you have that requires collateral. It is backed by an asset, so if you default on these sorts of debt, your lender in Ontario will legally be able to seize the asset and sell it to recoup some of the money they lent to you. Some of the types of secured debt include:
- Mortgages
- Title Loans
- Auto Loans
Unsecured Debt
Unsecured debt, on the other hand, is debt that isn’t backed by some sort of asset or collateral. This often comes with higher interest rates, due to the fact that they are riskier for lenders in Ontario. Some of the types of unsecured debt include:
- Credit card debt
- Student loans
- Medical bills
- Utility bills
Questions to Ask a Debt Settlement Company in Ontario
No matter where you live in Ontario, there is a good chance that there are several different companies that offer debt settlement in Ontario. So how do you choose which is the best option for you? Well, there are a few questions that you should try and ask a company before you sign on to work with them.
What is Your Experience in Settling Debt?
You want to make sure that the company you go with, in Ontario, has a lot of experience in successfully settling debt for other clients. Not only that, but the company should have a good reputation and if you hear numerous bad things about them, you should look elsewhere for assistance.
How Long Will It Take For My Debt to Be Settled?
You want to be sure to have a rough timeline of when you can expect to have your debt completely settlement. Of course, they won’t be able to give an exact amount of time, as that will depend on both your creditors and how much debt you owe.
How Much Do You Charge?
Of course, you want to learn and understand how much a company will charge you for their services. You are likely not doing the best, financially, if you are reaching out to a debt settlement company, so you don’t want to be overspending when you don’t need to. Also, fees should be charged once your debt is settled, so keep a watch out for companies that are trying to collect payment of fees upfront.
What Are My Alternatives?
Debt settlement isn’t the only debt relief option available to you, and a good company should be able to help you figure out if other options are right for you. They won’t discourage you from reaching out and considering other options in Ontario, and if they do, they might not be the right option for you.
For even more questions to ask your debt settlement company, click here.
Finding Out if Debt Settlement is Right For You
Now that you know a little about debt settlement, do you feel it is right for you? If so, be sure to reach out to Loans Canada to find the right debt settlement option for you in Ontario.
