Alternatives To Debt Consolidation Loans Make Better Money Sense

When you’re facing down multiple credit card bills, payday loans, overdue utility bills, or lines of credit that you need to repay, it’s easy to be tempted by advertisements for debt consolidation loans that promise to solve your debt problems. The problem is that for many consumers, debt consolidation loans are rarely the silver bullet they promise to be.

They can be a convenient way to combine your debt into one single payment and if you have good credit, even turn high-interest loans into lower-interest loans. But the problem is your credit score. By the time they’re in a position to consider a debt consolidation loan, many consumers already have a bad credit history. Banks will offer these types of loans at a low interest rate and give you a chance to pay off the debt faster, but only if you have a credit history that qualifies you. If you’ve been missing credit card payments or bills, you may be too much of a credit risk.

That’s when predatory lenders with unfair interest rates start to look more appealing. They rely on consumers who are in desperate need of money quickly. Their interest rates may even be higher than those on your credit card bill.

If you’ve been considering high-interest loans to pay off numerous other debts, it’s time to stop. There are insolvency alternatives that make better financial sense. One option is a balance transfer credit card that charges zero interest for a temporary period of time, usually 6-12 months. Be careful to make sure interest rates won’t be higher after that time period if you’re not going to have finished paying off the entire balance. The advantage to a credit card like this is that it lets you focus on paying back your balance without worrying about interest.

Another way to stop interest from growing on your debts is through a consumer proposal in Ontario, an effective option if you’re insolvent. You need a bankruptcy trustee like David Sklar& Associates to determine whether or not you’re insolvent and negotiate a consumer proposal on your behalf. A consumer proposal in Ontario reduces your overall debt, stops interest, and stops legal action against you from your creditors. These are some of the conditions that make you eligible for a consumer proposal:

  • You are insolvent, meaning you are unable to pay your debts
  • You have a source of income you can use to make monthly payments on your debt
  • You owe more than $1,000 and less than $250,000

Bankruptcy trustees are available across Ontario, such as David Sklar Pickering or one of their other GTA offices. In addition to consumer proposals in Ontario, they also help consumers with bankruptcies and meeting credit counselling requirements that are usually part of the insolvency process.

Credit counselling is an important part of going through insolvency. Not only will bankruptcy trustees like David Sklar& Associates help you find a way out of debt, credit counselling will help you avoid it in the future. You can start your path to debt freedom without taking on predatory loans. Start asking about debt relief and consumer proposals in Ontario.

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