If you wind up owing too much money to various entities, you can turn to a debt consolidator to help you get back on track towards financial stability. There are different types of debt consolidators who help different kinds of clients, so it's important to do some research first. With their help, you can get out of debt sooner and pay less each month than paying several different credit card companies at various interest rates.
Here are five qualities to look for in a debt consolidator:
1. Knowledgeable
The consolidator of your choice needs to be able to provide you with a clear direction on how to address your specific debt issues based on their knowledge of how to negotiate with creditors and put an end to collection calls. They also need to know how budgets work for people, especially those with limited income, based on the current cost of living.
Canadians will be spending about $1,600 more in 2017 to meet the cost of living, according to Conference Board of Canada chief economist, Craig Alexander. Additionally, the new carbon tax adds about $1,250 per household expense, which is why Canadians must pay close attention to every dime. The knowledgeable debt consolidator will consider these and other expenses when helping create your budget and spending plan.
2. Flexible
It helps if your debt consolidator is flexible since Canadians have multiple debt consolidation options and methods for addressing their debt, including:
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Debt consolidation loan
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Home equity loan
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Home equity line of credit (HELOC)
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Mortgage refinancing
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Line of credit
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Debt settlement
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Moving unsecured debt to one credit card
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Consumer proposal
Not everyone will have each of these options available to them, that’s why free expert advice from a certified credit counsellor can come in handy.
Flexible debt consolidators will analyze your situation and suggest the best solution for your needs. It's always helpful to weigh the pros and cons of each available option before making a decision. For example, the main advantage of a debt consolidation loan is that it can simplify your debt with a lower interest rate. However, a key disadvantage is that not everyone qualifies for a debt consolidation loan because much of it depends on your credit score.
3. Understanding
Everyone runs the risk of falling into debt, and a good debt consolidator will approach their clients knowing this. It’s important that a debt consolidator is empathetic and has a sense of understanding that anyone can fall into debt and run into debt trouble, and sometimes it’s due to circumstances beyond anyone’s control. Of course, there are cases where problem debt stems from issues like impulsive spending, but there are many other reasons why people can fall into debt and sometimes these reasons are beyond the person’s control.
Here are common reasons why people can fall into debt:
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Increased living expenses
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Injury or medical emergency
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Job loss
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Higher interest rates
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Lack of insurance coverage
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Victim of identity theft
The best debt consolidators work with clients on a practical level. They will consider the circumstances of your debt, your income level and your ability to pay within a certain time frame to develop the right plan of action and resolution for your problem debt.
4. Reasonable
In order to pay off your debt successfully, you need a reasonable payment plan with an interest rate your budget will allow. You also need a solution that not only addresses your debt but also looks at your entire financial picture to make sure that you are in a better position, financially speaking, after dealing with your debt than you were before.
For example, if you are able to refinance your home make sure you can reasonably afford the interest rate over the long-term. Keep in mind that finance companies and sub-prime lenders will usually offer higher than conventional bank rates, anywhere from 14% to 30%, which you may want to avoid. A better option for you might be working with a debt consolidator, especially when you consider the various fees that go along with something like a second mortgage.
Debt consolidators need to be able to establish arrangements that are reasonable for their clients, not just when it comes to getting rid of their debt but also their entire financial outlook.
5. Experienced
The more experienced your debt consolidator is, the better advice they will likely give you. Find out how many years they've been in business. It's best to work with an organization that's been through multiple economic cycles. The most experienced firms will help you create a budget that is used to set up a debt consolidation plan to ensure you spend less money than you earn. They will be able to help you out of debt, as well as into a more organized and strategic mindset for managing your money.
Experienced debt consolidators will be able to look at your finances and recommend a path that allows you to pay off your debt in three to five years at a lower interest rate. If you have a significant amount of money in savings you may benefit more from a debt settlement, which involves paying off the balance with a lump sum at a discount, but the right debt consolidator will be able to tell you what’s your best option.
Regardless of whatever path you choose to help you resolve your debt, a good debt consolidator will provide you with a solution that allows you to avoid bankruptcy and get back on track towards financial wellness and stability. Book a free appointment to know your options and start consolidating your debt today. Call 1.800.267.2272 or click here to learn more.
