Finding Debt Relief in Toronto that is Best for You
While searching for debt relief in Toronto, you will come across a lot of different options to choose from. It can become a confusing process since there is no one-size-fits-all solution. Understanding all there is to know about the different kinds of solutions can help you choose the one that best fits your needs.
Do It Yourself methods
Self-help debt relief options involve following precise steps for eliminating debt. The steps outline a clearly defined plan for the household budget to prioritize debt repayment. The first step is listing each debt you owe so you have a definite summary of your outstanding obligations. After that, you need to know how much exactly you can afford to pay towards liquidating your debt. List down all of your monthly expenses and then subtract the total amount from your monthly net income to come up with the amount that you can put towards paying debts. The next step is prioritizing your debts by concentrating on paying off one debt as much as possible while making minimum payments on the others. As each debt is paid off, the monthly amount that was being paid on it is added to the remaining debts and each, in turn, is paid off at an increasingly fast rate.
Formal debt solutions
If self-help methods do not work for you, you can turn to formal solutions to help pay down your debt.
Debt consolidation loan
Debt consolidation will involve getting a new loan to repay all your multiple loans. This option will work if you can make sure that you obtain the new loan at a lower interest rate than what you are currently paying and if you are able to consolidate all your debts into one payment through this new loan. The lower interest rate will leave you with more money to pay towards your monthly payment and allow you to pay off the debt faster. Your current debt problems may prevent you from qualifying for a consolidation loan as banks take into consideration a person’s total debt load, the percentage of credit used and history of making minimum payments when approving a loan, so keep an open mind that this is not the only option available to help you repay your debt.
Debt management plan (DMP)
In this type of debt relief solution, you will have to go through a credit counselling agency where you consult with a certified credit counselor who will evaluate your overall financial situation and then recommend that you enroll in a DMP if it is the best option for you to take. Once enrolled, the credit counselor will make a proposal to your creditors and negotiate with each of them to reduce the interest on your debts. If your creditors agree, you will then start making payments at the lowered interest rate until you pay back all of your debt. All of your monthly payments will be coursed through the credit counselor who will then distribute them to your creditors.
Consumer proposal
A consumer proposal is a formal proposal made to your creditors to pay back only a portion of the debt that you owe. This type of agreement can only be executed by a Licensed Insolvency Trustee (LIT). This is one of the legitimate debt solutions that can fully protect you from a wage garnishment, a lien on your home, from harassing phone calls and other legal action that creditors may take against you.
Bankruptcy
Bankruptcy is a debt solution that discharges most, if not all your debts, which means that you will not have to pay them back at all. Filing for bankruptcy can only be done through a Licensed Insolvency Trustee and just like in a consumer proposal, it offers immediate protection from all legal action taken against you.
When finding a solution for your debt problem, the goal is to find the one that really works for your individual situation. All solutions work, but not all will be the right solution for you. Always take time to research and make an informed decision about managing your debt so that you can find debt relief in Toronto that eventually can help you be debt free.