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Being in debt is not uncommon. In fact, the vast majority of Canadians living in Quebec have some sort of debt, such as student loan debt, car loan debt, or mortgage debt, to name a few. Without some sort of debt, many of us wouldn’t be able to afford to buy big-ticket items.
Here’s how you can borrow money for a large purchase.
But there’s a difference between manageable debt and drowning in it. Unfortunately, many Canadians struggle with paying their debt, they may even have so much of it that they struggle a great deal to pay it down.
Luckily, there are several options that they have available to them to help them out, including debt settlement.
How Debt Settlement In Quebec Works
Debt settlement is a type of program that is designed to help consumers reduce their overall debt. This is especially helpful for those who have multiple late or missed payments and may already have collections agencies hounding them for repayment.
Debt settlement companies are tasked with negotiating with creditors in an effort to slash the amount that you owe. Usually, the type of debt dealt with in these programs is credit card debt and other unsecured debt.
DIY Debt Settlement
There are plenty of reputable debt settlement companies in Quebec that can help you whittle down your debt load so you don’t have as much to repay. But you may be able to reduce your overall debt on your own by taking a DIY approach.
How Can I DIY My Debt Settlement?
For starters, you’ll want to come up with a schedule. The sooner you tackle your debt, the better. More specifically, the longer you let your debt go unsettled, the more agitated your creditors will be, which can make it more difficult for you to convince them to work in your favour. Creditors will want to be paid back in no more than one year, so you’ll have to make sure that your finances will allow for repayment within this time frame.
You will also want to get familiar with the way that your creditor’s collection cycle works so you can accurately track where your past due accounts stand in your creditor’s system.
If you’re able to convince your creditors to reduce your debt amount or even lower the interest rate, be sure to get the agreement in writing. You don’t want to rely on verbal agreements.
It should be noted that although you can negotiate with your creditors on your own, seeking professional help is often the better option.
Want to know how to qualify for debt settlement in Quebec? Find out here.
Can Debt Settlement Affect Your Credit?
When choosing a program to deal with your debt, it’s important to choose the option that will impact your credit score the least while still being the right choice for you. Many people choose bankruptcy right off the bat, but this has the worst effect on your credit score. That’s why it’s helpful to look over all debt solutions that are available to you and how they will each impact your credit.
Wondering how the types of credit accounts you have can affect your credit? Try reading this.
When it comes to debt settlement in Quebec, the effect it will have on your credit score depends on your specific situation. Ideally, your creditor will write off a lot of your debt because it will have less of a negative effect on your score. Considering how important this is, it makes sense to have a professional debt settlement company negotiate for you instead of doing it yourself.
Keep in mind that continually missing payments is very bad for your credit score. So if you’re unable to make payments, you may be better off taking the risk with your credit score and settling your debt.
Looking improve your credit in Quebec? Check this out.
Is Debt Settlement Right For You?
Debt settlement may be ideal if you’re in any one of the following situations:
- You’re unable to keep up with your payments
- You’re behind on most of your payments
- You have very high-interest rates on your debt
- You’re not overly concerned with your credit score
- You’re committed to making an improvement
Trying to decide which debt management option is right for you? Click here to make your choice easier.
Advantages and Disadvantages of Debt Settlement In Quebec
There are reasons why you would consider going the debt settlement route, as it can provide you with any one of the following benefits:
- Your debt-to-income ratio will be lower, which can help your credit score
- No more late payments will be contributing to your credit report
- You can start rebuilding your credit sooner if you pay off your debts sooner
But there can also be a few disadvantages to debt settlement, including the following:
- It will show up on your credit report, which can scare off future lenders from approving loans
- There’s also a possibility of accumulating more debt
Debt Settlement Alternatives
As helpful as debt settlement in Quebec may be, there are other options that you may want to explore in case something meets your needs more appropriately:
- Credit counselling – You can take part in counselling and educational programs that will teach you how to better manage your debt.
- Debt consolidation – This involves consolidating all of your debt with one larger loan at a lower interest rate.
- Consumer proposal – You can put together a proposal for your creditors to see if they would be willing to reduce or eliminate your debt or at least give you a lower interest rate.
- Bankruptcy – This is your last resort and involves giving up many of your assets in exchange for debt alleviation.
Questions to Ask a Debt Settlement Company
If you are considering debt settlement in Quebec, you should ask a few important questions first, such as the following:
- What are your fees?
- What is your track record as far as the amount of debt you’ve settled?
- Can I be sued?
- Can you offer me a guarantee that my creditors will stop calling? (A “yes” to this question is a red flag)
- How long will it take for my debt settlement to be completed?
- How will my credit score be affected?
- Who will be holding my money while my debt is being settled?
- Am I a good candidate for debt settlement?
The answers to these questions will help you gauge how credible the debt settlement company is and how helpful they may be to you.
Look here to discover some more questions that you should ask a debt settlement company.
Are You Ready to Settle Your Debt?
Debt settlement in Quebec can be the ideal option for you if you’ve determined that you absolutely cannot handle all of your debt on your own and are committed to making a difference in your financial life. Let Loans Canada help you find the right debt settlement company so you can alleviate your financial stress.