Loans Canada Launches Free Credit Score Portal And Is Recognized As One Of Canada’s Top Growing Companies
Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
Being in heavy debt can lead to huge financial problems for any Canadian borrower, yourself included. While a bit of consumer debt isn’t the end of the world, a lot of it can cause you to spend all your savings trying to get rid of it, or even worse consequences, such as debt collections, bankruptcies, and wage garnishment. Potential lenders will then see your unhealthy debt history, decide that you’re a risky borrower, and deny your applications for new credit.
For a better idea of how ongoing debt would affect you, look at our debt timetable.
If you’re currently in a similar situation, you might think that your only option is to apply for another loan, such as a debt consolidation loan, then add it to the stack of other unpaid ones you already have. Another loan could make your debt even worse, it could be time to consider some alternatives.
Before we move on to our debt management alternatives, let’s discuss the idea of consumer debt and how easily it can get out of hand when you’re not careful with your money.
For the majority of Canadian borrowers, consumer debt stems from credit cards, some of the easiest credit products to obtain. While debt can come from different sources, most adults have at least one credit card active as we speak. Not only are credit cards relatively easy to be approved for, they are even easier to use, especially with the introduction of “tap” technology, where you don’t even have to enter a PIN. At first glance, it would appear that younger generations, being carefree, are more prone to racking up credit card debt. Then again, older consumers, with far more regular expenses to handle, are just as susceptible.
Want to know what the average credit score in Canada by age is? Find out here.
With the rising cost of homes all over Canada, mortgage debt can also be a huge problem. Not to mention the expensive nature of any car, which many people need just to get their daily activities done. Since many of these debts are necessary enough, it’s almost inevitable that you’ll also experience such financial issues at some point.
Check out this infographic for even more information on how to finally tackle your debt.
If you’re currently in an unmanageable debt situation, you fear that you might be soon, or you’d just like some pointers so you can avoid such events, don’t worry. While it’s good to stay ahead of these kinds of problems, there are plenty of ways to manage your debt that don’t involve applying for a loan, bad credit or otherwise. Some of these solutions include, but certainly, aren’t restricted to:
While it’s not a direct way of eliminating your debt, going to credit counselling is a perfect first step, especially if your own debt problems are simply caused by lack of financial know-how. Credit counselors can provide extensive knowledge about every type of debt situation, as well as any debt management tips you need. They can even contact lenders and collection agencies on your behalf to negotiate a more reasonable payment schedule or even get your debt reduced (common with debt settlements and debt management programs, which we’ll discuss further below).
Things to ask about when undergoing credit counselling:
Want some information about credit counselling in your province? Check out this page.
If your debt does stem from unpaid credit card bills, this might be the right solution. You can apply for a balance transfer credit card (for more information, click here), usually through a different credit card company than the one you’re currently with. Most card users do this when they’re unsatisfied with the interest rate that they’re already paying with their present card. So, they’ll have their outstanding balance transferred to their new card, which ideally has an introductory rate of 0%, making the overall payments slightly more affordable.
What to watch out for with credit card balance transfers:
Look here to learn how to increase your credit score without increasing your credit card debt.
Let’s say you’re starting to get deep in debt and your lender has sold or is considering selling your account to a collection agency, which is common when your payments are more than 90 days overdue. As we said, a debt settlement involves the help of a credit counselor. In this case, they’ll contact your lenders or collection agencies in an attempt to have your debt reduced. If accepted, the lenders/agencies will settle the bill for less than you actually owe. They’ll often agree to it, as a more beneficial alternative to you declaring bankruptcy, after which they would receive nothing.
What to watch out for during a debt settlement:
Wondering how to negotiate a debt settlement on your own? Find out here.
Your credit counselor can also offer a debt management program to your lenders. Similar to a debt settlement, the counselor would negotiate a reasonable way for you to pay your debts. Only instead of settling for less than you owe, you’ll probably still have to pay your full outstanding balance. The good thing about these programs, however, is that you’ll be offered a payment plan, which will help you consolidate the debt over time through more affordable payments at a lower interest rate.
What to watch out for during a debt management program:
Filing a consumer proposal is one of the most drastic steps you can take toward debt elimination. In fact, you should only consider these next two steps (read about bankruptcies below) if your debt level is nearly impossible to deal with and you’re facing legal consequences as a result.
Similar to a debt settlement, you’ll need to hire outside help to get the consumer proposal process started. Only, in this case, you’ll be working with a licensed insolvency trustee, an Officer of the Court who’s tasked with drawing up a legally binding debt repayment proposal between a borrower and lenders. A consumer proposal, while not quite as extreme as a bankruptcy, is one of these agreements. If it’s accepted, you’ll be eligible for a reduced balance and interest rate, and a “stay of proceedings” will occur, meaning your lenders must cease their attempts to collect your debt.
What to watch out for when filing a consumer proposal:
Ever wonder what the true cost of borrowing is? This infographic is for you.
When your back is against the wall and no type of loan would do you any good, your only choice might be to file for personal bankruptcy. Again, you’ll need to work with an insolvency trustee, who will come up with an agreement that frees you from your debt through a stay of proceedings. In this case, however, that debt will be completely eliminated and any payments you need to make (explained below), will be given directly to the court where your bankruptcy was filed.
Want to know how secured debt is treated during bankruptcy? Click here for the answer.
Things to watch out for when you’re filing for bankruptcy:
If you’re currently dealing with debt and aren’t sure what option is best for you, we can help you find the solution that’s right for your unique situation. Don’t hesitate to contact us today for more information.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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