Debt consolidation in Ontario can be a good way of coping up with an overwhelming debt. There are debt consolidation Ontario agencies like CTL LAW that are offering their services to assist you avail of such. Their debt consolidation programs or are sometimes called debt management plans and is designed to assist you get back on track and gain financial freedom once again.

Here are the important things that you should know first about consolidating accounts through an agency:

It's a third-party payment system.

A debt management plan will consolidate all your debt or loans into one single entity. You will then be paying one credit counseling agency, instead of several. The agency in turn will disburse your payment to your creditors until they are fully paid. Please take note that they are not making any loans nor will settle your debt. The agencies have pre-arranged conditions with several financial organizations that offer lower interest charges and fees. This means that more of your money will go straight to paying the balance rather than on the interest fees. If your creditor does not offer reduced settlements, there will be a reduction of the benefits.

Agencies vary in quality.  

Good choices are those that are from nonprofit credit counseling organization that belongs to either the  Association of Consumer Independent Credit Counseling services or the National Foundation for Credit Counseling.  The member agencies, as well as, the councilors are well trained and have passed the rigorous standards set forth by the Council on Accreditation for Children and Family Services Inc.  These agencies are well organized to put the consumer on top of their concern.

Counseling is required.

Every process requires with counseling. A good agency like Sauvageau & Associates will not require you to avail a debt consolidation if you cannot afford to pay the basic expenses. They will try to check though if there will be available alternative for your specific situation.

Consolidation begins with a financial assessment. 

A discussion with a well-informed and sympathetic counselor or an expert debt recoverylitigation professional like Francois Sauvageau will be an educational and inspiring session, but not all are similar. You can request for a different counselor if needed.

It's simple, steady, and efficient. The payment process will be constant until all your debts are settled. If an account has been fully paid, the other accounts will then receive a larger amount, which in turn speeds up the payment process. Debt consolidation can also eliminate the follow-ups coming from your creditors once the ball is rolling. This is actually a relief for you.

Again, consolidated debt can be helpful when executed properly. However, you can actually do it on your own by suspending charging and requesting rate reductions from each of your creditors. If you failed, try to pay larger than required payments, and try to request again. You can review your budget if you can send larger amount.

Finally, prioritize with the highest interest rate. When that account is done, move on to the next highest rate and so on.  Finally, try to live within your limits and try to prepare for future financial emergencies instead. 

Why Debtors Opt For Debt Consolidation In Canada?

A debt consolidation Ontario loan is the process of merging all your existing debts and rolls them into a single loan.  There may be a number of reasons why this is done and some are: 

  • By having one single monthly payment, you simplify your finances instead of paying several.
  • To be able to pay a high-interest loan be left with a single and possibly a lower interest rate.
  • Getting in touch with a bank or a credit union is normally the first step for a debt consolidation loan.

Add the Debt to Your Mortgage    

An alternate to a consolidation loan is through your mortgage. You might want to look further into it and see if you have a sufficient equity in your home mortgage to consolidate your debt. This type has been a usual choice simply because of interest rates- they are lower with mortgage loans. Not to mention that this is a long-term loan, 25 years to pay, to say the least.

If you opt for this option, make sure that you try to settle that extra mortgage at the soonest possible time, but it is also not advisable doing this on a regular basis; let us say every year or two.  If this is the situation, then it simply means that you are spending more than what you can afford. It will also take a longer time for your mortgage to be paid off.

Get a Debt Consolidation Loan

As we have mentioned earlier, a bank or credit union might be able to provide you with a debt consolidation loan. Please do keep in mind that, typically, banks and credit unions can only lend up to 10% of one’s net worth. That is, your asset minus your debt, for an unsecured loan. This means that if you are asking your bank for a debt consolidation loan of $20,000, but your net worth is only $20,000, then your request will probably be declined, but they will try to offer you a $2,000 unsecured loan, 10% of your net worth. 

Another way to approach a bank is by having a security for your consolidation loan. If you own a newer vehicle model with a loan attached to it, a bank can offer you the maximum black book value of your vehicle. Another valuable asset that you can add to your value are a boat, motorcycle, RV, mobile home, non-RRSP mutual funds or piece of property. Any or all of these can actually be used as a security.

You have to bear in mind that obtaining a debt consolidation loan, which a lot of people in Canada are doing right now, can initiate the process of debt reduction. However, it still will not eliminate your financial problems if you do not create a monthly spending plan.  This will all be useless if you do not go within your budget. The key to financial freedom is living within your financial means. Of course, it is very convenient to use your credit card when you want something. In no time at all, you are going to be in the same situation again like before.