Debt settlement programs are a form of debt relief that is available in Canada. When you enroll in a debt settlement program a debt counselor works with you to help determine a way that you can pay off your outstanding debts.
The reason it’s called a “settlement” is because, with the help of your debt counselor, you negotiate with your creditors on a payoff that will settle your debt in a lot lesser amount – not pay it off completely.
Your debt counselor will determine how much you can afford to pay your creditors and negotiate with them so they will accept that payment and “settle” for that.
When your creditors agree to a debt settlement, they will no longer go after you for the full amount you owe them but will agree to either a one time payment or a monthly payment plan – usually at a lower interest – and that will cancel your debt.
Debt settlement can be a quick way for Canadians to pay off multiple outstanding debts quickly without putting their entire assets at risk. Read on to find four good reasons on why you should consider a debt settlement program to become debt free in 2021.
1. Debt settlement programs save you money by lowering your interest rates
One of the biggest reasons why you might find yourself struggling to make monthly debt payments is because of the interest rate. The interest rate on a debt is a percentage by which the amount you owe raises every month.
If you have multiple debt and different high interest rates, it can get harder and harder to make all of your payments.
If you go for debt settlement, you won’t have to worry about multiple bills and multiple high interest rates. If your debt counselor can negotiate for one lump sum payment, this will usually be an interest fee and any late fees and charges incurred will be waived.
If your debt counselor gets your creditors to agree on a payment plan, it will be at a lower interest rate than the original loan. This will keep your monthly repayments down and make it easier to save money.
2. Streamlines the payment process
Another problem for people with multiple sources of debt can be keeping track of all the payment due dates. And, since not making payments on time often results in them being charged with late fees and penalties, this increases the monthly payments over time and could make it harder to pay off a debt.
With debt settlement, you don’t have to worry about remembering to pay multiple billers. You just make a payment to your debt settlement company and they use that to pay your billers according to debt settlement terms that were agreed on during negotiations.
3. It is a quicker way to get out of debt
Since debt settlement payments are lower than the monthly payments that you are struggling to make, you can pay off your debts quicker.
Your debt counselor will look at your financial history and help you come up with a budget that will allow you to both pay for monthly necessities and make your debt payments.
Because your monthly payment to your creditors is now at a more manageable rate and your debt settlement company will ensure that you don’t miss those payments, you will find yourself debt free quicker than if you didn’t enroll in the program.
4. It is less damaging to your credit score
Your credit score is important to your financial future. It will impact your attempts to get financial products, such as loans or credit cards.
Being in debt or missing monthly loan or bill payments will have a negative effect on your credit score. Creditors will look at your credit score and credit history, see those missed payments and think that you might be a risky proposition and refuse to give you a loan in the future.
Take advantage of our Free Consultation offer to know if you qualify for this great government approved debt settle option that will help change the rest of your life and live a life with peace of mind.