When you’re trying to get out of debt, the biggest obstacle is that it’s so expensive. It’s constantly growing and soaking up the money you’re using to pay it all down. Any tool that you can apply to reduce interest rates will speed up the path toward debt-freedom and improve your finances.

Debt consolidation is designed to reduce interest rates and make your credit more affordable. 

Debt Consolidation with Bad Credit

There’s more than one way to get debt consolidation in Canada. Loans are available, but they’re not easy to get. In order for a debt consolidation loan to work, it has to have a low interest rate – lower than what you’re paying on all of the tradelines you want to include. To do that, you have to go to a bank or credit union that will offer low interest rates, and you’ll need a good credit score to get approved.

Many people looking for debt consolidation are already barely hanging on. Their accounts may have gone to collections, which has a significant negative impact on your credit, or have a history of missed or late payments.

However, you can consolidate debt without a loan with a Debt Consolidation Program (DCP). You can get help with one of these from certified Credit Counsellors from a non-profit credit counselling agency. Without applying for a new loan, you can reduce the cost of your debt.

But how do debt consolidation services work in Canada?

  • A certified Credit Counsellor negotiates with your creditors to reduce or eliminate interest rates.
  • They negotiate with your creditors to stop collection calls to give you some peace of mind.
  • You make one monthly payment that  gets disbursed to all your creditors.
  • You can automate your payments with tracking.

The Advantages of Debt Consolidation

What makes a DCP desirable? First, it’s an alternative to bankruptcy that doesn’t jeopardize your assets. When you file for bankruptcy, you put investments, home equity, and personal property at risk. You could lose investments that weren’t in a retirement account or even cherished possessions.

Creditors have a right to compensation even if you opt for insolvency. By taking the DCP route, you retain more control over your assets and financial situation. As long as you can keep up with payments, it can make a lot of sense.

Why not try to pay it back alone? Interest rates are eating into your budget and keeping you from becoming debt-free sooner. Interest inflates the amount you borrow and gets you to pay as much money as possible. A DCP can shave months off your debt freedom plan and save you a lot of money in the long run. The less you have to spend on interest, the more you can put toward paying down the principal.

Speed up your plan for getting out of debt. With the right debt consolidation tools, you can reduce your costs and your timeline.