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  1. 1. Are you struggling to keep up with minimum payments? Are your interest rates risingcontinuously? If so, debt consolidation may be the right debt relief solution for you. In Canada, debt consolidation type programs have been used for many years as a way to obtain debt relief without having to file for bankruptcy. Debt consolidation programs offered by debt relief/management agencies are a very popular debt relief option. These agencies can help you consolidate your debts into one, easy payment so you can get out of debt fast.Chapter 13 Bankruptcy
  2. 2. What is Debt Consolidation? Debt consolidation involves combining yourunsecured debts such as unsecured personal loans, lines of credit, and creditcards, into one lump sum, normally without incurring any penalties, interest orvery little interest When consolidating debt, you do not just make interestpayments to your creditors but you also pay off the principle amount of thedebt Participating in a debt consolidation plan gives you the ability toeliminate your total unsecured debt owed to creditors and restore your creditover time When you enroll in a program offered by a debt relief/managementagency, you will consolidate your debt into one single monthly payment planthat is sent to the debt management agency The amount you pay is much lessthan paying each debt individually that can be up to 70% less than what youare currently paying which is why debt consolidation is so popular
  3. 3. Debt Consolidation Process The process of debt consolidationinvolves working with a debt management/credit counselor from a debtmanagement/relief agency The debt counselor takes your information andyour list of debts and your creditors, and with your prior written consent,contacts the creditors to inform them that you will be entering into debtconsolidation program The counselor will then negotiate with each creditor alower amount to repay Each creditor must approve the repayment planOnce each creditor agrees, you will send one lump sum each month to thedebt management agency until the debt is paid off
  4. 4. Once you send your monthly payment to the agency, your debt counselor willdisburse the agreed upon payments to your creditors The monthly paymentyou pay is applied to your total debt owed that contains little or no interestYour debts get paid off faster, in less than 5 years Benefits Of DebtConsolidation Participating in a debt consolidation program could be a veryimportant life decision This debt relief option has been used with greatsuccess sby millions of people
  5. 5. The program gives you the ability to take advantage of our interest eliminationor reduction agreements As well, debt consolidation is an ideal alternative tobankruptcy as your credit rating takes less of negative hit both in the short termand long term In addition, you pay off 100% of the principle amount of thedebt which is much better for creditors Impact on your Credit Whenyou are participating in a debt management plan such as debt consolidation,you are deemed an ‘R7’ This designation means you are in a voluntarydebt repayment program
  6. 6. As an R7, you are expected not to acquire any more unsecured credit Whenyou complete your debt consolidation plan, your R7 will change Somecreditors may start offering unsecured credit while others may wait for a certaintime period It all depends on each creditor’s policy
  7. 7. Chapter 13 Bankruptcy Debt Consolidation Eligibility To be eligible fora debt consolidation program, you will have to speak to a debt managementcounsellor A debt counselor from a debt management/counseling agency willassess your ability to repay your debts in 5 years or less The preliminaryinterview with the debt counselor will cover your financial situation such yourtotal unsecured debt, household expenses, and income Consultations aretypically free
  8. 8. Once approved, the debt management agency will take over and get the debtconsolidation process started Helping Canadians with DebtCare Canada25 Sheppard Avenue West, Toronto, ON M2N 6S6 (416) 907-2582
  9. 9. Chapter 13 Bankruptcy