Debt Solutions

Debt Solutions » Debt Consolidation

Debt Consolidation

Debt consolidation is a method of combining multiple debts into one. A single debt consolidation loan can often reduce your interest charges into a single, simple, easier to manage repayment to help you take back control of your finances, and reduce the stress and other impacts debt creates in your daily life. A debt consolidation program gives you access to a credit counsellor who will determine exactly how much you owe and who to. They will create a personal budget that keeps you on track in making your monthly payments and negotiate with your creditors to form an agreement on the best way to repay your debts using a payment schedule.

How does debt consolidation work?

To consolidate debt, you must apply for a consolidation loan. To apply for a debt consolidation loan, you will need to show your lender that you are able to repay the full loan amount over the new term (generally 36 or 48 months) by supplying details of your income and monthly outgoings.

You may also be required to provide additional security to be approved for a debt consolidation loan. This could be a co-signer or additional collateral. Collateral assets may include your home, car or other valuable items that you own.

Your lender will take account of your financial situation by reviewing your credit score, debt service ratio and employment status when considering your loan application.

To make the process as simple as possible, you should be able to supply your latest income tax assessment, a pay stub, your current debt statements, household bills, and any information on your collateral assets.

The benefits of debt consolidation

Debt consolidation can be a simple and effective way to manage your debt and help you save money in the long term. Not only will a consolidation loan provide experience in budgeting, it allows you to repay various debts with one affordable monthly payment.

Your plan will include:

  • One monthly payment
  • A fixed-term to repay your debts
  • Reduced or removed interest charges
  • An end to collection calls and legal action
  • Professional guidance and advice

Advantages of debt consolidation

The key advantages of debt consolidation are that you will be making lower monthly payments that are affordable in line with your income and monthly expenses.

Hopefully, your quality of life will improve without the constant worry of struggling to pay back the money you’ve borrowed, but you must be willing to make the commitments required to repaying what you owe.

Your debt consolidation loan will be created within an acceptable budget designed exclusively around an acceptable standard of living for you in your personal circumstances. If you fail to follow the plan, you will be in danger of breaching the terms, and you may fall further into debt than before.

A debt consolidation program will give you access to expert guidance into the various options available to you. Your program will provide information about budgeting your finances over the term of your consolidation loan, and for the future. You will gain a better financial understanding to help avoid debt problems in the future and the knowledge to manage your budget to make savings and live a less stressful life.

By consolidating your debts, any harassment or legal action involved in the pursuit of those debts, or from payment collections, will stop immediately.

A debt consolidation program can help you make a head start on repairing your credit report. It will show future lenders that you took a responsible measure towards managing your debt, and on completion that you successfully repaid the full amount to your creditors.

Debt consolidation can help you avoid bankruptcy, which would have a severe impact on your financial future.

Disadvantages of a debt consolidation

There’s no debt relief with a debt consolidation loan. It only consolidates debts. You will still have to pay the full amount of what you owe, however, this is usually with a single monthly payment making debt management easier.

By freeing up existing debt facilities, for example, credit card, store credit, etc., you may be tempted to use these avenues to build up further debt. It’s important to be aware that if you borrow money and add additional debt to any of your freed-up credit options could easily put you into a position where your total debt becomes unmanageable and impossible to pay back.

If your consolidation loan is designed to be repaid over an extended period of time, you may be charged higher interest rates. Although your monthly payments could be lower and more manageable, you may end up repaying more money than you originally intended.

You may lose your home or the equity in your property if you use it as collateral against your loan. If you fail to make repayments or regularly miss your payment dates, your lender is entitled to sell your home to recoup the loan amount and recover any losses.

Am I eligible for debt consolidation?

To be eligible for debt consolidation, your total monthly debt will likely be higher than 20% of your income. Debt consolidation is available for people in any situation.

You will not be judged on your level of income or employment status. Our professional debt experts will help find the most suitable consolidation plan for your unique situation and guide you through the whole process.

What debts can be included in debt consolidation?

Most unsecured debt types can be included in your debt consolidation plan. These may include:

  • Credit card debt Credit cards are the most common debt types involved in debt consolidation loans – they are the main reason for consumers taking out consolidation loans
  • Credit Union unsecured debts or credit card debts
  • Retail store credit card debt
  • Unsecured personal loans An unsecured loan is a loan that isn’t protected by a collateral item such as your home or vehicle, or another person co-signing for your repayments
  • Payday loans
  • Auto repossession debt If you failed to keep up payments for a vehicle loan, you might be able to include those in a debt consolidation plan
  • Utility bills
  • Cell phone bills
  • Gas cards
  • Non-government student loans A private or non-government insured student loan debt that is straining your finances can often be included in your debt consolidation
  • Medical bill debt Not all medical bills are eligible, but many are. Consult your credit counsellor to find out if your medical debts are appropriate for consolidation
  • Other unsecured lines of credit

Other debt solutions

How we can help you with your debt

You’re on your way to resolving your debt problems, this is what will happen next.

Fill out the form and arrange a call back with one of our debt advisors.

We will then run through all of the options available to you and advise you on which is the best option for you

We will then help you put the debt solution in place that will help you get back on track