Learning About Debt Consolidation
There is no doubt that 2020 has been a difficult year for everyone. Illness, quarantine, businesses closing, has sent people scrambling to keep their financial heads above water. At the beginning of the COVID-19 emergency, people used vacation pay and savings to comply with staying home. Months into the pandemic people have become more desperate. We began borrowing against RRSPs and other retirement plans. And, we used our credit cards. Now it’s time to pay up, but we are still stuck.
Before we get into the options available to you, let us remind you that you are not alone. People across the globe are dealing with the same problems you are. Companies are doing their best to stay afloat and to keep their employees working. Therefore, people you have done business with will be a bit easier to work with, given your past behavior of paying your bills on time.
Keep in mind that Debt Consolidation is not for everyone. A client seeking help in this area needs to have a decent credit score. Your financial records should show you are responsible and trustworthy.
Types of Debt consolidation
Debt consolidation loan
When a person’s payments get out of control they can turn to a bank, credit union, or finance company, which will lend you enough money to pay off all of your debts. Then you are allowed to pay everything back with one, (lower interest) monthly payment.
Home equity loan
You can use the equity in your home to get out of your current situation. Taking a loan from a traditional bank, using your home as collateral is often a good choice. This is also called taking a second mortgage.
One great benefit is you can take advantage of very low-interest rates. They could be as low or lower than the interest on your first mortgage.
However, use caution if you turn to a Finance Company for your loan. The interest rates will be higher. This choice is usually made by people with poor credit. But, if that is your option, ask around and do not go with the first finance company that tosses out a number.
Problems with using home-equity to get out of debt
- You must have enough equity in your home to withdraw.
- There may be additional fees involved to arrange a second mortgage
- Your bank may have a minimum they will loan now.
Credit Cards to pay your way out?
- You can usually get a low-interest rate with credit cards
- Be careful to watch the interest rate. If it is an intro offer it could expire while you are planning to use it
- You have the freedom of paying extra on the principle of your loan with your card which helps
Your options are very simple. You can opt to file bankruptcy. This process takes a while. You will work through a trustee and you will surrender everything you have to the court. A petition to allow you to keep your home and car. Everything else will be turned over to the courts. Bankruptcy is usually kept on your record for around 9-months. Then you will begin to rebuild your financial life. However, there may be a better way.
Getting Guidance you need
These are just some of the ways you can take control and recover your financial life. One of the most important things to do for yourself is to get professional help. Get help with the debts that are controlling your life. Let a counselor teach you what to watch for and how to survive when the economy seems to be turning on you. If you know what to watch for you can usually take care of things so it will not get out of control.
You can have many of the tools already in your possession. Go to your financial institution and ask about open lines of credit. Work with them to get your scores in position. When something unexpected happens, you will already have a plan of defense.
Canadian experts tell us the changing climate and the wetlands it is creating has a lot to do with the evolution of Corona. While they are using everything they know to battle this problem, it could come again in a different form.
This may seem overwhelming to you. It seems that way to a lot of people. While not of this is fun, it is a great learning experience. The Canadian Government does not want your home. They do not want you to lose your business. Canada, like other countries in this world-wide pandemic, wants you to thrive and survive.