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A consumer proposal is a legal debt settlement agreement between you and the creditors to settle the debt. Canada’s Bankruptcy and Insolvency Act governs this kind of legal arrangement.
A consumer proposal can be used by individuals who hire a licensed bankruptcy trustee to mediate and propose the creditors an alternative preventing you from declaring personal bankruptcy. The amount recommended by the trustee is based on your income and what you own. These proposals have the potential to minimize the amount of debt you need to pay to the creditors.
Are you eligible?
If you fulfil the following conditions, only then you are eligible for a consumer proposal:
How is a consumer proposal useful?
A consumer proposal is a statutory legal binding between an individual and the creditors which means:
A consolidation loan is an instalment loan that can pay two or older loans with a new loan. This kind of loan has a longer payback duration, and the amount of instalment is less than the combined total of the instalments of the paid off loans.
Consolidating a loan implies you take a loan from one creditor and pay off all the other existing loans. It leaves you with just a single debt to worry about every month.
Who is eligible?
If you take a consolidation loan for the right reasons, it is good for you. These reasons include an urge to pay off the debt or reduce the number of payments. However, if you consolidate debt to borrow more, it is bad. It has benefitted people who are determined to pay off the debts or are willing to stop credit as a crunch.
How is it useful?
The whole purpose of taking a consolidation loan is to make your debt payment simple. There is only one creditor you have to deal with, and this will eventually result in paying less in interest payments.
But, before going ahead, you must work on other alternatives available.
By consolidating the debt, things can become more manageable, but it is not a solution to your debts. The liability still exists. Consider this: the terms and conditions of the smaller loans may prompt you to pay extra fees in a single go. One must take this into account before making a decision. You can opt for changing your habits such as spending less. Merging is good, but making alterations to your lifestyle is more important.
A debt settlement is a legal agreement between a creditor and a debtor wherein the creditor agrees to take less amount than taken. Usually, some unsecured debts namely credit card debt, medical bills, store charges, service contracts, billing disputes, lease defaults, signature loans, repossession deficiencies, charge-offs, liens, past due utility bills, judgments, debt stemming from lawsuits, attorney fees, can be settled. In most of the cases, the accounts eligible for a settlement are the ones which have been declared as delinquent or are declared uncollectable to settle.
Who needs Debt Settlement?
Debt settlement is needed when there are too many skipped or late payments and collection accounts.
A collector is not ready to accept anything less than you owe if he has the reason to believe that you can pay the full amount.
The credit score is scrapped, and the income is not sufficient to match the debt obligations.
Debt settlement companies negotiate with the creditors to reduce your payments. However, it cannot be an option on many types of debts.
It isn’t a great an option. It is not a good option for many people. It is risky and may not work for many people. It may also prolong the financial pain. A debt settlement doesn’t stop collection notices, late fees, and threats of being sued when the settlements negotiations are to be played out. Though it is not easy, if you succeed at reaching a debt settlement with the creditors, it will take years to come into effect.
Credit counselling is nothing but a means to improve an individual’s financial condition. While some people need to learn how to budget, some have grave concerns about the credit and still many more need help to deal with their debts. Nevertheless, credit counselling is a means to resolve an individual’s financial problems and offer him further help.
Who needs Credit Counselling?
If you are in debt and fear personal bankruptcy, consider enrolling yourself in credit counselling as soon as possible. It is determined that with the right credit policy in place, you can get your finances running smoothly. This, in turn, helps in preventing undertaking other debt solutions such as personal bankruptcy and consumer proposal.
What happens during credit counselling?
Generally, credit counselling takes no more than 30 minutes whether you are taking an online credit counselling or telephone credit counselling.
Here is how the credit counselling will prove beneficial to you:
Budgeting is a process to plan how to spend your money. This plan is called a budget. It helps in creating a spending plan for your money. It ensures that you have money for the essential things you need. By following a budget plan, you keep yourself out of any debt or work on different manners, if you are in debt.
How is budgeting useful for an individual?
Who should consider budgeting?
You should consider budgeting if you: