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Debt Consolidation Loans
Helpful or Hurtful ?

http://www.ic.gc.ca/app/ccc/srch/nvgt.do?prtl=1&estblmntNo=234567135890&profile=cmpltPrfl&profi
leId=501&app=sold&lang=eng
http://www.ic.gc.ca
http://cambridgelifesolutiondebtsettlement.ca/

Debt Consolidation Loans
Helpful or Hurtful?



Debt Consolidation is often marketed to consumers as a way to roll all your debts up into a single
Account

 In a way, this is accurate, but that sentence portrays debt consolidation as some kind of easy fix –
it’s not

 Debt consolidation is a new line of credit with a financial institution; usually a home equity loan
(the funds backed by collateral, i.e. your house), a personal loan or a credit card

 The idea is that you use the money from your new line of credit to pay off all the other debts you
owe

 At that point , you are left with one single monthly payment instead of multiple ones, making
It easier to manage your finances

http://www.ic.gc.ca http://cambridgelifesolutiondebtsettlement.ca/

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
 This can be useful for several reasons; one being that interest is only
accumulating for one account instead of multiple accounts

 Meaning you have a relatively concrete knowledge as to what your monthly
charge will be and can therefore budget accordingly

 Secondly, if you qualify for a home equity loan or a personal loan, your interest
rate will likely be significantly lower than a credit card, especially if you are
currently paying multiple credit cards at varying interest rates

leId=501&app=sold&lang=enghttp://www.ic.gc.ca


 If you don’t qualify for a home equity loan or a

 Debt consolidation can be a suitable
personal loan, there are specialized debt solution to credit card debt, utilities and
consolidation companies that are available to similar types of consumer loans
help you

 However, there are some higher risks involved  But it is important to be aware that it is
with these types of companies, including higher not necessarily a solution to all your debt
rates of interest than other loans – your mortgage, for example, would not
qualify
 If your credit is even remotely damaged, the
interest rate you will get on this loan is likely to
render negligible any improvement from your  In order to qualify for a consolidation
current situation loan, the customer usually needs to have
a good credit rating and be financially
solvent (i.e. have a sufficient income to
be able to make the payments on the
loan)
http://www.ic.gc.ca
  An unacceptable credit rating will mean
you are unable to get a debt
consolidation loan


 If you have experienced some type of financial  You are reducing the amount of
hardship and are having trouble making your
payments, it is probably a good idea that you don’t credit you have available, which
get a consolidation loan
could damage your credit score
 It might sound simple but there are definite risks
involved
 However, this is kind of a Catch-22,
 An integral element in terms of your credit score is because leaving the lines of credit
the amount of credit you have available and how
much of this credit you are using open will make it very tempting to
use them again
 If you close the accounts once you have
consolidated your debts and paid off your existing
creditors
 If you do this, you can end up with
the exact same debt problem plus
your consolidation loan for your
previous debt
http://www.ic.gc.ca/app/ccc/srch/nvgt.do?prtl=1&estblmntNo=234567135890&profile=cml
Prfl&profileId=501&app=sold&lang=eng
http://www.ic.gc.cahttp://cambridgelifesolutiondebtsettlement.ca/


 This could put you in such a financial  In essence, a debt consolidation
hole that you are forced to consider more loan can be helpful if you are able
serious options to control your spending habits and
can afford the monthly payments
 Such as a debt management plan, a
consumer proposal or filing for
bankruptcy  However, it is important to
consider the risks listed above – If
 All of these will seriously damage your you have several years’ worth of
credit for a significant period of time on-time debt repayment

 A further option would be debt  And are completely certain you are
negotiation, which is a less official form financially responsible enough to be
of debt-relief option, but can still impact able to set a strict budget and stick
your credit
to it, perhaps a debt consolidation
loan is a good choice for your
situation

http://www.ic.gc.ca


 However, if you have even the slightest worry about not
  Debt negotiation can be a great
being able to make the payments or being tempted by the
newly-freed-up lines of credit available to you, a debt alternative to consolidate loans since
consolidation loan is probably not for you debt negotiation programs are not
 There are a variety of other debt relief options – all will
credit score driven (you can have
impact your credit in some way, but they also ensure you good or bad credit to qualify)
are accomplishing your goal of getting out of debt,

 Without providing the tantalizing distraction of those  Nor does it require you to securitize
freshly-paid-off credit cards, which is one of the primary
risks of debt consolidation your debt by a physical asset such as
your home or car

 No home ownership or equity in your
home is required to do debt
negotiation
http://www.ic.gc.ca/app/ccc/srch/nvgt.do?prtl=1&estblmntNo=234567135890&profile=c
mp
tPrfl&profileId=501&app=sold&lang=eng
 Debt consolidation can save you
http://www.ic.gc.cahttp://cambridgelifesolutiondebtsettlement.ca/ interest however debt negotiation can
save you thousands in interest but
also possibly thousands in the
PRINCIPAL amount you owe

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