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How to consolidate your debts


A financial hardship can happen to anyone. You can find yourself with an unmanageable debt load as a result of a sudden job loss, income reduction, health problems, or marital breakdown. As a result of a high debt load, your life can turn into a never ending cycle of missed payments, collection calls, and the constant anxiety of how to make ends meet.

When debt has become overwhelming it might be a good idea to merge all of your debts into one single debt to help you reduce the interest being paid. Most credit cards usually charge interest rates ranging from 12% to 25% or more. The term “debt consolidation” includes a wide range of options. Below, we will describe 2 different ways you can consolidate your debt:

Debt Consolidation Loan

A debt consolidation loan is a single loan from a bank or a private lender that will allow you to pay off your total debts (credit cards debt, payday loans, etc.) at once. You will then have to repay the lender 100% of the debts paid, plus interest, and fees. Eligibility for the loan usually includes having an acceptable credit rating, stable income, and you must be able to demonstrate that you have the capacity to make regular repayments on your outstanding balance, while considering your living expenses. Some banks and private lenders may require a co-signer or security (collateral) such as your home for the loan. Interest rates are lower than credit card loans, and usually range from 6.0% to 10.0%. With high interest rates and fees, a debt consolidation loan can still cost you a considerable amount that may not fit your budget.

Consumer Proposal

A consumer proposal is another option to consolidate your debt into one monthly payment; without any interest charges. It is a legally binding agreement between you and your creditors, and would be paid over a 5 year period, or less. You would only pay a portion of your original debt owed usually paying back between 25%-30%. The amount to be paid back to your creditors would be a reasonable amount that is suitable to your financial situation. Once your proposal is accepted by the majority of the creditors (by dollar value), all other creditors are legally obligated to accept the proposal.

As soon as you file a consumer proposal all interest charges, collection calls, wage garnishments, and any legal actions will stop. A consumer proposal can only be filed by a Licensed Insolvency Trustee, who will negotiate with your creditors on your behalf. A consumer proposal is a great debt relief option which allows you to have a fresh financial start with payments that suit your budget and allow you to keep your home, car, and other assets that are important to you.

If you feel your debt load is too much to handle and you are overwhelmed by your current financial situation, a consumer proposal may be an option for you. At Sheriff Sole & Madej Inc. our commitment is to find the best solution for you. Call us at 1-844-482-3328 to book a free confidential consultation. We offer services in 12 convenient locations throughout the Greater Toronto area with staff members that speak over 7 different languages.

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