What we’ve noticed – Frequently seen case
Many people turn to the Internet to find solutions to their debt problems. Debt consolidation is one of the most popular search topics. When consulting with people and after looking at their day-to-day finances and debts, people will often conclude that a consumer proposal is a better alternative to debt consolidation. However, let’s discuss debt consolidation.
Debt Consolidation or Consumer proposal?
Listen to our Podcast which contrasts the 2 options:https://ginsberg-gingras.com/en/podcasts/dept-consolidation-or-consumer-proposal/
What is debt consolidation?
Debt consolidation is the process of combining all your loans and/or credit cards into one single loan.
Why debt consolidation?
The idea is to reduce payments while trying to lower interest rates. Instead of making multiple payments each month, you only have to make one.
How consolidation is calculated
The question of how much funds you can obtain from a debt consolidation depends on several factors:
- your credit rating,
- your income,
- your assets and
- the total amount of your current debts.
Usually, lenders will want the amount of consolidation to be enough to cover all your debts while ensuring that you have the ability to pay the loan. Each lender has its own criteria. Usually, the maximum obtainable is around 33% of gross annual income.
Consolidation and bad credit
If you have bad credit, debt consolidation is not impossible, but it may be more difficult. However, there are specialized lenders who offer debt consolidation loans to people with bad credit. They may require a co-signor or charge higher interest rates.
Successful consolidation
There are no statistics, as success depends on the individual. If you are disciplined in your payment habits, stick to a strict budget while being able to pay your day-to-day expenses, debt consolidation can be very effective.
Changes might be necessary.
If you accumulate new debts after consolidation, the process won’t be much help. It’s also crucial to note that debt consolidation doesn’t eliminate your available credit, but simply reorganizes debt repayment.
Alternative to debt consolidation – The Consumer Proposal
A consumer proposal is not a loan, but rather an offer to your creditors based on your ability to pay. In fact, the amount to be paid is determined according to your budget and considers your family obligations. A consumer proposal typically settles your debts for an amount of 30% to 50% of the balance outstanding of your debts (excluding vehicles and houses), interest-free.
- No guarantor or co-signor is required. It’s between you and your creditors.
- Can be made alone or jointly if debts are shared, but not required. The decision is yours.
It’s easy to make an appointment, visit : https://ginsberg-gingras.com/en/book-an-appointment/
To speak to an advisor, call (800)567-1905.
You can also chat with us via our website ginsberg-gingras.com or Messenger via our Facebook page.
For over 40 years, Ginsberg Gingras & Associates have helped more than 150,000 people find their way back to financial stability.
About the author
Stephan V. Moyneur, PAIR/SAI, licensed insolvency trustee.
https://ginsberg-gingras.com/trouver-un-syndic/stephan-v-moyneur/
https://www.linkedin.com/in/stephanmoyneur/