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Debt Consolidation in Newmarket

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Consumer Proposal vs. Bankruptcy

More and more Canadians are taking on consumer proposal as a solution to debt problems. Most people were not aware of consumer proposal until the past couple of years and many opted for bankruptcy in insolvency cases. At York Credit Services, we believe in providing consumers with accurate and informative knowledge on the financial options available. Everyone’s case is different and this is why we customize our services to the needs of our clients. It all begins with Newmarket credit counseling where we get to learn more about the individual and their financial challenges. From these interactions, we can determine whether a consumer proposal or filing for bankruptcy would be best. Our debt relief specialists have loads of experience and the professionalism to handle these matters.

Debt Consolidation Loan

There are many options to get debt help in Newmarket. An option that your debt relief expert may recommend is getting a debt consolidation loan. This form of financing can make managing debt easier since you tackle only a single monthly repayment. Most people who take a consolidation loan can pay off their outstanding debt within 2 to 5 years. This option brings together all your debts into a big loan that has a lower interest rate.

The debt consolidation loan allows you to save money on interest. It also gives you an opportunity to focus on a single payment instead of dealing with multiple creditors each month. The fees for a consolidation loan can be much lower than standard forms of financing. Most banks ask for collateral before giving you this loan. If you get an unsecured debt consolidation loan, expect to pay higher interest rates. Your debt relief expert can advise on what options are available to you.

Borrowing against the value of your home, commonly referred to as taking a second mortgage has its pros and cons. First, you need to understand that your home equity grows every time you make monthly payments on your loan that reduces the balance. Additionally, your home gains value when you make significant improvements or when the real estate market grows in the area.
However, when you take a loan against your home, you lose equity.

With a second mortgage, you may receive a lumpsum which you can use to pay multiple creditors and then repay it gradually over time. The other option is to take a line of credit which is simply a pool of money that you can draw from whenever you want to. You’re given a maximum borrowing limit and you can repay then borrow whenever you need to. Second mortgages allow you to borrow significant amounts so you can use it to clear a substantial amount of debt. Additionally, these mortgages have low-interest rates compared to other types of
debt. You may also qualify for some tax credits on interest paid for second mortgages which makes the loan cheaper in the long run. Keep in mind that defaulting this kind of loan can lead to foreclosure. The loan may also involve numerous costs such as credit checks, origination fees and more closing costs which make it quite an expensive option.

Some people may qualify for a secured or unsecured line of credit or overdraft. This allows them to offset their debts by taking advantage of the lines of credit. Once you have access to an overdraft, you can get money to clear high-interest debt and then make a minimum payment at the end of each month for the amount you took. Lines of credit usually come with lower interest rates as well as flexible payment options. You can pay off the overdraft as fast or as slow as you wish depending on your financial ability.

However, there are some major drawbacks of taking a line of credit or overdraft. You must have the financial discipline to spend the amount you take wisely and pay the minimum amount each month. There is also the risk of the prime rate going up which will ultimately affect your minimum monthly payments. If the prime rate goes up and you are expected to pay a higher amount each month, it could put you at greater financial risk. It’s always wise to learn what other
options you have in order to consolidate your debt and choose one that’s fit for your needs. Our debt relief experts can provide invaluable advice to help you get out of debt fast.

Balance transfer credit cards are a popular method of debt consolidation which is done by shifting multiple credit card debts to one card with a lower interest rate. It simply works by allowing you to take one loan in order to pay off multiple loans which are more expensive to service. Credit card balances usually attract very high-interest rates. A missed payment could mean thousands of dollars in fines. By taking a credit card with a lower interest rate, you’re able to make reasonable payments each month that fit your financial ability.

How do balance transfer credit cards work?

When you approach your bank or any other finance company that issues credit cards, they may be able to issue you with a card that has low fees or a 0% APR introductory rate. This means that for a specific period, you can access credit and make minimal monthly payments in order to pay down the principal. However, the APR will rise after the introductory period so be ready to pay higher than what you started paying at some point.

You may approach a credit counselor to help you determine if you qualify for a debt management plan. The credit counselor will also assess your financial situation and advise whether your creditors are likely to accept the debt management plan before writing a proposal. Credit counselors work with numerous individuals to try and negotiate the terms of a debt management plan with creditors on behalf of their client. Payments can only be made once all the creditors have agreed to the program. All payments are made to the credit counselor who will then disburse the amounts received each month to your creditors based on what was agreed.

Once you finish paying the monthly fees, you will no longer owe any of the creditors who were part of the debt management plan. The main advantage of joining this program is that it allows you to make one monthly payment. You no longer have multiple payments with different interest rates and due dates to deal with. Additionally, you’ll get support and advocacy from credit counselors who are going to help you map out a clear path to debt freedom. This program gives you the structure and strategy you need to repay your debt in a timely manner.

+ Debt Consolidation Loan

There are many options to get debt help in Newmarket. An option that your debt relief expert may recommend is getting a debt consolidation loan. This form of financing can make managing debt easier since you tackle only a single monthly repayment. Most people who take a consolidation loan can pay off their outstanding debt within 2 to 5 years. This option brings together all your debts into a big loan that has a lower interest rate.

The debt consolidation loan allows you to save money on interest. It also gives you an opportunity to focus on a single payment instead of dealing with multiple creditors each month. The fees for a consolidation loan can be much lower than standard forms of financing. Most banks ask for collateral before giving you this loan. If you get an unsecured debt consolidation loan, expect to pay higher interest rates. Your debt relief expert can advise on what options are available to you.

+ Second mortgages

Borrowing against the value of your home, commonly referred to as taking a second mortgage has its pros and cons. First, you need to understand that your home equity grows every time you make monthly payments on your loan that reduces the balance. Additionally, your home gains value when you make significant improvements or when the real estate market grows in the area.
However, when you take a loan against your home, you lose equity.

With a second mortgage, you may receive a lumpsum which you can use to pay multiple creditors and then repay it gradually over time. The other option is to take a line of credit which is simply a pool of money that you can draw from whenever you want to. You’re given a maximum borrowing limit and you can repay then borrow whenever you need to. Second mortgages allow you to borrow significant amounts so you can use it to clear a substantial amount of debt. Additionally, these mortgages have low-interest rates compared to other types of
debt. You may also qualify for some tax credits on interest paid for second mortgages which makes the loan cheaper in the long run. Keep in mind that defaulting this kind of loan can lead to foreclosure. The loan may also involve numerous costs such as credit checks, origination fees and more closing costs which make it quite an expensive option.

+ Lines of credit or overdrafts

Some people may qualify for a secured or unsecured line of credit or overdraft. This allows them to offset their debts by taking advantage of the lines of credit. Once you have access to an overdraft, you can get money to clear high-interest debt and then make a minimum payment at the end of each month for the amount you took. Lines of credit usually come with lower interest rates as well as flexible payment options. You can pay off the overdraft as fast or as slow as you wish depending on your financial ability.

However, there are some major drawbacks of taking a line of credit or overdraft. You must have the financial discipline to spend the amount you take wisely and pay the minimum amount each month. There is also the risk of the prime rate going up which will ultimately affect your minimum monthly payments. If the prime rate goes up and you are expected to pay a higher amount each month, it could put you at greater financial risk. It’s always wise to learn what other
options you have in order to consolidate your debt and choose one that’s fit for your needs. Our debt relief experts can provide invaluable advice to help you get out of debt fast.

+ Credit cards

Balance transfer credit cards are a popular method of debt consolidation which is done by shifting multiple credit card debts to one card with a lower interest rate. It simply works by allowing you to take one loan in order to pay off multiple loans which are more expensive to service. Credit card balances usually attract very high-interest rates. A missed payment could mean thousands of dollars in fines. By taking a credit card with a lower interest rate, you’re able to make reasonable payments each month that fit your financial ability.

How do balance transfer credit cards work?

When you approach your bank or any other finance company that issues credit cards, they may be able to issue you with a card that has low fees or a 0% APR introductory rate. This means that for a specific period, you can access credit and make minimal monthly payments in order to pay down the principal. However, the APR will rise after the introductory period so be ready to pay higher than what you started paying at some point.

+ Debt management plans

You may approach a credit counselor to help you determine if you qualify for a debt management plan. The credit counselor will also assess your financial situation and advise whether your creditors are likely to accept the debt management plan before writing a proposal. Credit counselors work with numerous individuals to try and negotiate the terms of a debt management plan with creditors on behalf of their client. Payments can only be made once all the creditors have agreed to the program. All payments are made to the credit counselor who will then disburse the amounts received each month to your creditors based on what was agreed.

Once you finish paying the monthly fees, you will no longer owe any of the creditors who were part of the debt management plan. The main advantage of joining this program is that it allows you to make one monthly payment. You no longer have multiple payments with different interest rates and due dates to deal with. Additionally, you’ll get support and advocacy from credit counselors who are going to help you map out a clear path to debt freedom. This program gives you the structure and strategy you need to repay your debt in a timely manner.

What is a consumer proposal?

Consumer proposal refers to the negotiated agreement between you and your creditors through a consumer proposal administrator. When we negotiate for this agreement, we will develop a legal document that will protect you from debt collectors who can be quite determined when chasing after debts. The agreement will also include a partial repayment of the total unsecured debt that you owe while the creditors will write off the rest of the balance. The consumer proposal process requires the input of a Newmarket debt relief specialist who understands the law and loopholes that can used to get the creditors on board.

When it comes to credit solutions, no one-size-fits-all solution apologies and this is why bankruptcy could still be a viable option to others. Speaking with a credit counselor can shed a lot of light on the options for debt relief depending on individual financial characteristics. At York Credit Services, we believe that financial information should be available to all our clients in an honest and easy to understand manner so they can make the best decisions to improve their finances.

We can help you avoid bankruptcy

Consumer Proposal vs. Bankruptcy

Bankruptcy is often considered as a more drastic solution due to the perceived repercussions of choosing this route. Consumer Proposal and Bankruptcy also do posses some similarities

Both bankruptcy and credit protection protect you from the nagging calls of debt collectors

However, in a consumer proposal, no assets can be seized by creditors. With bankruptcy, some specific assets can be seized by creditors but the exceptions vary from province to province. Consumer proposal is simply considered a better solution because you get to keep all your assets; these debt reduction solutions can ensure your family does not end up homeless.

In a consumer proposal, the agreement will include manageable payments

Payments are designed for your income bracket. With consumer proposals there are no standards that dictate how much this should be and the payment solution is completely customized. Consumer proposal is therefore great for individuals with a reliable income source. Bankruptcy can be critical if there is no reliable income source that can help you make these payments. The biggest challenge with bankruptcy is the stigma that comes with it and it can affect some professional designations or business license eligibility among other complications.

Qualify for both bankruptcy and consumer proposal

Anyone who is insolvent and unable to pay their debts can qualify for both bankruptcy and consumer proposal. However, your creditors have to agree to your proposal in order to implement the agreement. Most often creditors are willing to settle for a lower amount as long as payment is guaranteed. With bankruptcy, creditors have no choice but to accept the situation as it is and some of them may never receive any kind of payment.

Consumer proposal

The consumer proposal can guarantee an immediate financial improvement. Once your creditors agree to these payments, you are already on your way to financial recovery. You do not need to pay more money towards these agreements even if you start making more money allowing you to save up for the future. With this in mind, a lot of consideration is necessary before filing for bankruptcy as these records will remain in your credit report for a couple of years to come.

The consumer proposal process is not complicated and our Newmarket debt consolidation and debt relief experts will help you navigate and complete the process as soon as possible.

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