Just about everyone has some sort of debt, whether it’s in the form of student loan debt, a car loan, or a mortgage. Some of life’s biggest expenses make it very difficult for the average consumer to be able to cover them all in full, and that’s precisely why loans and credit products exist.
And while debt can put a dent in a person’s finances, a little bit of debt is actually a good thing and can help consumers establish good credit. In turn, this can help open the door to many loans and credit products that they may want to take out in the future.
But too much debt can be completely overwhelming and financially debilitating. Many Canadians find themselves drowning in debt and unable to climb out of it without some outside help. In some cases, debt can be so bad that consumers may eventually need to declare bankruptcy.
Fortunately, there are several programs available that are designed to help consumers deal with their debt, including debt settlement. In this article, we’ll discuss what debt settlement Moose Jaw is and if it’s the right program to help you deal with your financial issues.
How Does Debt Settlement Moose Jaw Work?
Debt settlement can help consumers get out of debt and even save money on interest and fees that they are paying on their outstanding loan balances. With a debt settlement program, a representative from a debt settlement company will sit down with you and discuss all your options. Your entire financial profile will be assessed to make sure that this program is the most suitable one for you.
If debt settlement Moose Jaw is determined to be the ideal way to deal with your debt, the debt settlement company will begin working with your creditors to reduce the principal amount of what you still owe and lower your interest rates.
Having a professional with experience negotiating with creditors may be a better option for you to settle your debt more favourably than if you were to negotiate with them yourself. Depending on your exact situation, you can expect a reduction of principal to be reduced by as little as 20% to as much as 80%.
After an agreement is reached, you will still be responsible for paying back what was agreed upon. The payment process will start as soon as you enroll in a debt settlement program. You will then begin making payments into a dedicated account from which your creditors will be paid as the funds accumulate.
After you have paid off all creditors, you will be debt-free.
How Will My Credit Score Be Impacted?
Debt settlement is meant to help alleviate you of your debts, but it can also have a negative impact on your credit score. For starters, your credit score will likely be impacted because your outstanding balance owed is reduced artificially without you having paid it down yourself. Further, any delinquent payments to your debt settlement account could further impact your credit score.
Having said all that, your credit score is likely being pulled down now anyway as a result of all the debt you are carrying, which may be resulting in missed or late payments. By dealing with your debt today, you can start making positive changes to your financial situation and eventually work toward bringing your credit score back up. Reducing your debt load will help put you in a more comfortable position to make timely payments, which inevitably will be a good thing for your score.
Am I the Right Candidate For Debt Settlement Moose Jaw?
Before you choose debt settlement as a way to deal with your debt, consider all other options first to make sure this is the right avenue for you. You’ll want to ensure that you are the right candidate for this program. Debt settlement Moose Jaw is best suited for you if the following describes your situation:
- You’re carrying at least $10,000 of unsecured debt
- You’re having a very hard time making minimum monthly credit card payments
- Collection agencies are constantly calling you
- No matter what payments you make, they’re not making a dent in your debt load
- You want to avoid filing for bankruptcy
Secured Vs. Unsecured Debt
Debt settlement Moose Jaw can be a great way to help you reduce your debt load, but not all debt can be dealt with in this program. The types of debt that can be settled this way are unsecured debts, like credit cards and personal loans. Secured debt, like mortgaged, cannot be dealt with through a debt settlement program.
What’s the difference between secured and unsecured debt?
Unsecured debt involves debt that is not backed up with any collateral. Since there is no asset of value guaranteeing the loan or credit, they are riskier for lenders and tend to come with higher interest rates a result.
Secured debt involves debt that is backed by collateral. For instance, a mortgage is collateralized by a house. These types of loans are less risky for lenders because there is an asset of value that guarantees the loan in case the borrower defaults. These types of loans cannot be alleviated through a debt settlement program.
Pros and Cons of Debt Settlement Moose Jaw
Debt settlement Moose Jaw can be an effective way to deal with your mounting debt and may sometimes be the best and the only way to get rid of it in order to avoid bankruptcy. But there are also some drawbacks to this program that should be considered. Here are the pros and cons of debt settlement:
Pros
- Lowers your overall debt
- Reduces your interest rate
- Helps you better manage your finances
- Reduces your debt-to-income ratio (DTI)
- Stops the collection calls
Cons
- Your credit score may suffer
- You may find it difficult to secure a loan while the debt settlement is still on your credit report
- You could make your debt worse if you don’t make your payments
- You may still have to pay fees even if your debt isn’t settled
- There’s no guarantee that your creditors will agree to a settlement
Alternatives to Debt Settlement
Debt consolidation – With debt consolidation, a new, larger loan will be taken out that can then be used to pay off all other eligible smaller, high-interest rate debts. With this program, you will only have one debt to pay as opposed to many, and you can save money by getting rid of other credit accounts with very high-interest rates.
Credit counselling – This type of program involves working with an expert to help educate you on how to better manage your finances and come up with a plan to help you get out of debt. This avenue is best for those who are having a tough time with their debt but are still able to pay their bills. Depending on how much debt you carry, credit counselling can be a lengthy process.
But by using sound practices and certain programs, you can effectively climb yourself out of your pile of debt. That said, credit counselling may not be suitable for those who are in extreme amounts of debt and are unable to make their payments any longer. In this case, a more drastic measure may be required.
Consumer proposal – The last resort before opting for bankruptcy, a consumer proposal involves settling at a lower debt amount with your creditors than what you really owe. Your creditors will still be paid something, but not as much as what you rightfully owe them.
If a proposal is agreed to, a lot of your debt can be forgiven once your consumer proposal is filed. The creditors that hold the majority of your debt will need to agree to the proposal in order for it to be legally binding.
Bankruptcy – If no other debt relief program is enough to help bail you out of your situation, then bankruptcy may be your last resort. With this option, you will be legally protected from all creditors and will no longer be required to pay them. In return, some of your valuable assets may need to be surrendered in order for your creditors to be dealt with fairly.
The value of these assets will be deposited in a trust, from which your creditors will be paid. If you meet all bankruptcy requirements, you can be discharged from your bankruptcy over a specified period of time, and most of your debts will be eradicated.
Are You Ready For Debt Settlement Moose Jaw?
If you’ve exhausted many options but are still struggling with your debt, then debt settlement Moose Jaw may be appropriate for you. Be sure to discuss all your options with a professional before making this decision. Once you’re ready, Loans Canada can put you in touch with a reputable debt settlement company. Contact Loans Canada today and finally free yourself from your debt.
