Saying NO to bankruptcy with Debt Settlement
When faced with a large amount of debt there are several options available; options such as bankruptcy Canada, and debt consolidation. While bankruptcy should be considered only as a last resort, it may be wise to take advantage of services such as debt negotiation when monthly bills begin to pile up.
Debt consolidation services offer a predetermined monthly debt repayment plan, and are widely accepted amongst most credit and collection companies. Electing to work with a debt consolidation company will provide those in debt with a single monthly payment, often at a lowered interest rate than what they currently have with their existing creditors.
If the individual in debt qualifies for debt consolidation their monthly payment will be lower than those offered by a credit card agency. Therefore eliminating the need to file bankruptcy Canada, and saving money each month.
The downfall of debt consolidation is that it is often difficult to qualify, especially for those with credit problems. Consolidation plans also require the cancelation of all credit cards and often times require hefty monthly maintenance and administration fees.
Debt negotiation or debt settlement Canada, on the other hand, is better geared towards those unable or unwilling to take out another loan. One of the biggest benefits of debt negotiation is the ability to cut ties with creditors. Once a settlement has been reached, the debt negotiation firm will maintain all creditor contact and financial transactions.
In most cases, the debt settlement Canada firm will negotiate a settlement with each creditor. Typical settlements range from 45% – 60% of the outstanding balance and interest. Once the settlement has been successfully negotiated, the debt negotiation firm will provide the creditors with a single lump sum payment. This payment will be made normally in a period of three years after entering the agreement.
Much like bankruptcy and consumer proposals, a debt negotiation plan will have a negative effect on personal credit scores so long as the individual is still active in the program. Fortunately, however, many debt negotiation firms are now stipulating that creditors must notate the accounts and paid in full with the credit reporting agencies once the settlement has been honoured so that it does not continue to reflect poorly on the credit score.
In Canada, bankruptcy is not the only option. Those overwhelmed by debt should take the time to research the solutions available to them. In many cases debt negotiation and settlement is a far better solution than creating more debt or filing a claim of insolvency.
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