Your 2018 Debt Consolidation Options
As Canada’s household debt continues to rise, many Canadians are looking at debt consolidation options. Rising interest rates and new mortgage rules are leaving less room for debt and those who once had a comfortable cushion may now find themselves struggling.
If you’re finding yourself in a position where your debt is becoming unmanageable, or you want to be proactive and pay it down before it becomes so, here are your 2018 debt consolidation options you may want to consider:
- Home Equity Loans
If you have equity available in your home, you may be eligible for a home equity loan. This can be a viable option, so long as the interest is low. You can use the loan to pay off your higher-interest debts and then repay your home equity loan in single, monthly payments. However, home equity loans often depend on your credit score and the interest can be high.
- Lines of Credit
A line of credit is similar to a home equity loan, only you don’t need to own a home. A line of credit can also help with your debt consolidation, but it can come at price. Many will cost you 8% interest or higher, meaning you’ll be able to pay down debt, but repaying your line of credit will cost you. You also need to have good credit. If you have bad credit or owe a lot of debt, this may not be the answer for you.
- Mortgage Refinancing for First Mortgage or Second Mortgage
Both mortgage refinancing or a second mortgage are great options if you have a lot of debt and sufficient equity. However, your credit often needs to be good and if you’re carrying too much debt, you may not be eligible.
- Consumer Proposal
If your debt is excessive, you may be able to manage it through filing a consumer proposal. An offer is made to your creditors to repay a portion of what you owe in lieu of the whole payment. However, filing a consumer proposal can majorly affect your credit score making it extremely difficult to qualify for any type of credit years after the fact. A consumer proposal must also be filed through a Licensed Insolvency Trustee (LIT, or formerly known as a bankruptcy trustee) who takes a portion of what you pay.
Filing for bankruptcy leaves you with only one monthly payment, stops interest and collection action, and reduces debt. However, like with a consumer proposal, it also majorly affects your credit. It must also be filed through a LIT.
A seasoned financial professional experienced in all of the above is your best bet to get professional financial guidance. Not only can DebtCare Canada work through the debt consolidation options, but they can also liaise and arrange the solution.
At DebtCare, we deal with debt. A debt consolidation may just be the answer you’re looking for when it comes to getting rid of debt.
Call us today at 1-888-890-0888.