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What are the Different Types of Debt Relief in Canada

Types of Debt Relief

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These are the Debt Relief Programs available in Canada in 2020.

No one wants to be in debt, but most Canadians, at one time or another might find themselves needing to take out a loan or mortgage or might find themselves falling behind on their credit card payments. In these cases, they might need to consider debt relief.

There are generally three forms of debt relief available in Canada. These are debt consolidation, debt settlement, and debt management programs.

1. Debt consolidation

Debt consolidation basically means that you take out a loan to pay back all your pre existing loans. This option is especially good for Canadians who are struggling to pay off multiple loans.  

The idea behind a debt consolidation loan is that you take it out to pay off your debts. So instead of struggling with multiple debt payments, you just have to make the payment of your debt consolidation loan.

Aside from simplifying your life by making sure you just need to remember to make just one monthly loan payment, debt consolidation also keeps your debts down. Loans have interest rates, so that every monthly payment you make is just a little higher than the previous one. Multiple compounding interest rates often have people struggling to pay off their debts. Debt consolidation loans however, have lower interest rates, so your monthly payments are lower. This makes it easy to pay off, so you can get out of debt quicker.

2. Debt settlement

Debt settlement means that you negotiate with your creditors to agree on a reduced payment rate.  Debt settlement can be achieved with the help of a debt counselor. It is your debt counselor who will approach your creditors and negotiate with them to reduce your debt payments.

In debt settlement, you end up paying off less of your debt instead of the whole amount. You agree that you will pay off a certain amount of the debt you’ve racked up either in one payment, or on a payment scheme. While this sounds advantageous, it’s not that great for your financial future. 

Debt settlements show up on your credit report and will remain there for three years. This will have a negative impact on your credit score and could prevent you from getting a loan or even a credit card in the future.

3.  Debt Management Program

A debt management program also known as debt consolidation programs and credit counseling programs are similar to debt settlement in the sense that they pair you up with a counselor who helps you come up with a way to get out of your debt. 

Your counselor will help you create a budget that will allow you to cover your debt while still allowing you to spend for basic expenses. They will then negotiate with your creditors on how you can pay off your debt. This could include lower monthly interest rates and an elimination of incurred penalties to make it easier for you to pay off your debt.

In many cases, debt management programs help people pay off their debts in three or five years. They also help you develop and learn better financial management techniques so, once you are out of debt, you are better equipped to live a debt-free life. 

Talk to a Debt Relief Agency to know more…

National Debt Relief Services is a debt relief agency dedicated to help people get out of debt the fastest and easiest way. We have a team of expert debt consultants who will assess your financial situation and provide you the most suitable debt settlement option.

Talk to us by taking a Free Consultation, just click on the link below to learn more. No upfront fees, no commitments, no obligations!

Click here to see if you qualify for debt consolidation from anywhere in Canada.

“Got signed up with the perfect persons, Ezel!! He was patient and understanding especially me being a mom to a teething, screaming baby in background he fully understood and work around times that would be better suited for me. Ezel walked me threw the step by step to get me the right help and now shines some light on a future for me and my son. Sometimes things get rough and he made sure to not let this become an additional stress for me which I really appreciated…he talked to me like a human and not another number in the system :)…thank you for your on going support threw my changes Ezel.”

-Josee Lanthier

“The best thanks for the helping me out through tough times.”

-Edwina Gamurot

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