Taking on debt is something that most people in Ottawa and quite frankly the rest of Canada need to do at one time or another. This could be to buy a home, get an education, purchase a vehicle, or because of a financial emergency. Unfortunately, many people in also end up going into debt by purchasing things they don’t really need.
In particular, Ottawa and the rest of Ontario are seeing its average household debt increase significantly in recent years. While some in Ottawa may be able to handle excessive debt on their own, others cannot. Thankfully, these individuals have debt relief options like debt settlement that can help them regain their financial freedom.
How Does Debt Settlement Work in Ottawa?
So what exactly is debt settlement? Well, debt settlement is when you work with a credit counsellor in Ottawa to come up with an offer to settle your debt with your creditors. This is generally only done if you do not reasonably believe that you’ll be able to pay the loan off in a timely manner. For example, if you owe $10,000 to a creditor, you may make an offer to settle the debt for $6,000.
For more information about qualify for debt settlement, click here.
Of course, make sure to make this a fair offer as there is no rule stating that your creditors must accept a debt settlement. If the amount is good enough, they will generally take it to ensure they recoup some of the money and to avoid having to chase you or take legal action against you.
How Does Debt Settlement Work?
Well, the first step is to find an expert to work within Ottawa, as making a debt settlement on your own isn’t always the right option. Once you have someone to work with, you’ll need to come up with an offer to make to your creditors that you believe they will accept.
When the right amount has been decided, send the offer to your creditors. Once accepted, you will pay the agreed upon amount to your creditor and you will be freed from the debt. If denied, you will have to make another offer or simply come up with a way to pay back the debt in full.
How Will Debt Settlement Affect Your Credit?
While a debt settlement can potentially save you thousands of dollars, what is the effect on your credit? Well, as you could imagine, a debt settlement has a negative effect on your credit (check this out for more information). On your credit report, it is recorded whether a debt is paid off in full or is settled. Anything other than paying off your debt in full will have a negative effect. However, the overall negative effect will depend on how your creditors report the debt, how large the debt was, what you settled for, and more.
While this might not sound the best, it is much better and easier on your credit than something more extreme like a consumer proposal or bankruptcy. But while a debt settlement in Ottawa will generally hurt your credit a little bit, sometimes that’s okay. In many cases, it’s better to start over fresh with bad credit and work to rebuild it than it is to continue struggling with a large amount of debt.
Questions to Ask a Debt Settlement Company in Ottawa
When it comes to getting a debt settlement approved, you want to ensure you are working with the right people in Ottawa. As a result, you need to be sure to shop around and find the right individual or company to work with in Ottawa. But what exactly should you ask these people or companies to weed out the good ones in Ottawa from the questionable ones. Well, there are a few different questions we recommend asking them.
What is the Cost of Your Services?
While money isn’t everything, you likely don’t have a lot of money to throw around if you are looking to settle debt. As a result, it is a good idea to find out how much the company in Ottawa will charge before you work with them. Going with the cheapest isn’t always the best idea, but you still want good value either way.
What is Your Experience in the Space?
Of course, you want to work with a company in Ottawa that had a solid track record in the industry. Make sure they have successfully settled debt in the past and have solid reviews or testimonials online. Be sure that they can prove this experience, as any company in Ottawa can simply say they have years of experience in a particular industry in.
Just How Long Will My Debt Settlement Process Last in Ottawa?
While no company in Ottawa will be able to give you an exact date, it is a good idea to know how long they expect the process to take. Generally, you want this to happen quickly so you can free yourself from the debt and begin rebuilding your credit and finances. This will also help you judge how expensive the debt settlement process will be and how much or how often you need to save.
Looking for even more questions to ask? This article is for you.
Is Debt Settlement Right for You?
Do you have debts that you don’t believe you can pay off in full? If so, a debt settlement might be the right option for you. If you are interested in learning more about debt settlement or your other debt management options, Loans Canada can help.
