The short answer is yes, a debt consolidation loan may help you avoid bankruptcy in Canada, or anywhere else. Here’s why:
If you qualify for a debt consolidation loan (and there are ways to increase your chances of qualifying for a debt consolidation loan), then you will probably pay a lower interest rate.
With a lower interest rate, even if your monthly payments are the same, more of your monthly payment will go towards principal, and less will go towards interest, so you will get your debts paid off years faster.
Use our free, on-line debt consolidation loan calculator to determine what your monthly payments are likely to be. If the numbers look reasonable, a debt consolidation loan may be the solution to your debt problems, and you may be able to avoid bankruptcy.
You have some high interest debts, like credit cards, so you decide to lower the interest you are paying by getting a debt consolidation loan. But before you go to the bank, you want to know whether or not you will qualify for a debt consolidation loan.
To qualify, you will need to have the income to repay the loan. The larger the loan, the more income you will need to qualify.
Here’s a quick way to find out: use our free, on-line debt consolidation loan calculator. It’s easy to use; all you need is the current total you owe on credit cards, auto loans, and other debts. It also helps to know the interest rate you are currently paying, so that you can see how much money you will save.
You then enter the amount you wish to borrow, and the interest rate you expect to pay, and instantly you will know whether or not you can afford the debt consolidation loan.
Knowledge is power: you don’t want to go to the bank and get turned down for your loan. If it looks like you won’t qualify, it might be wise to take some steps to increase your chances of qualifying for a debt consolidation loan.
So start now by using our our free, on-line debt consolidation loan calculator, and take that first step to reducing the interest you are paying by getting a debt consolidation loan.
Is Debt Settlement a better option than a debt consolidation loan? Perhaps, but there are some debt settlement myths to be aware of:
1. Debt settlement doesn’t hurt score – Unfortunately debt settlement will give you a lower credit score than you would get with perfect credit.
2. All creditors agree to debt settlement – Most creditors may agree, but they are not legally bound to accept any offer.
3. Debt settlement companies are helpful – Some are, some aren’t. Generally they will only put in effort if they are being paid.
4. Money sent to the debt settlement company is safe – Not necessarily; there are many debt settlement scams.
5. Debt settlement is going to eliminate debt in 12 months – There is no fixed time; it will depend on how much you pay, and how quickly you pay it.
More information can be found in our article on Debt Settlement Myths.
Before you apply for a debt consolidation loan, you want to ask yourself the most basic question: Do I qualify for a debt consolidation loan? The answer will depend on four factors:
First, what is your income? The lender must assess your ability to repay the loan. If you are not working, or if you have low income, you probably won’t qualify for a debt consolidation loan.
Second, how much do you want to borrow? Obviously it is easier to qualify for a $10,000 loan than for a $100,000 loan. The more you want to borrow, the higher your income will need to be.
Third, do you have any security or collateral for the loan? If you want to borrow $200,000, and you have a house worth $400,000, it will enhance your chances of qualifying for a mortgage debt consolidation loan. If you don’t own a home, or if your home has no equity, you won’t qualify.
Finally, what’s on your credit report? If you have bad credit, it’s unlikely you will qualify.
To find out more, try our free debt consolidation loans calculator to see if you qualify.
It is very tempting to hire a “professional” to help you get a debt consolidation loan. In most cases that’s not necessary. You can go to the bank yourself, and bring proof of your income and a list of your debts, and qualify for a loan without any help.
Debt and credit consultants often promise to help you deal with your debts, and even pay off your debts for only a few cents on the dollar. They will offer a debt settlement program, which they will tell you is better than a debt consolidation loan, to repay your debts faster.
It sounds like a good deal, but often debt consultants are scams, and they are not a good alternative to a debt consolidation loan.
They will charge a large fee, up front, and then they accumulate money until they have enough to propose a settlement. Unfortunately that can take many months, or even years, before they have enough to make a settlement. While you are waiting for the settlement to happen the creditors will still be calling you, and they may even sue you.
You have options, including a debt consolidation loan, a Chapter 13 Wage Earner Plan, and a consumer proposal. You can even file bankruptcy in Canada, or Chapter 7 Bankruptcy in the USA. Consult an expert today and review your options.