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How to Qualify for Debt Consolidation in Canada

by:
Sandy Daykin

There's nothing like seeing your hard-earned money deposited into your bank account, and while it’s always nice to see it stay there for at least a couple of days, the reality for many of us is that it won’t remain there for long. As the old saying goes, “Easy come, easy go.” But where is our money really going, and what options do we have when managing our bills becomes too overwhelming? We've got a few answers!

Where Many Canadians Spend Their Money

All too often, a big portion of our income goes towards the interest on our debts and loans, service charges, and fees. It typically starts off with just one credit card but then things can start to spiral fairly quickly. For example... 

  • The bank offers a second credit card because it has reward points that build up the more you use the card (i.e., get enough points, get a free blender);

  • The bank suggests a personal line of credit, for life's emergencies and those unexpected expenses;

  • Your bank provides an overdraft protection of $3,000, just in case;

  • A furniture company offers a 12-month, no payment, no interest plan (in the form of a high interest retail credit card) so you can buy a new mattress and finally get a good night’s sleep;

  • Your local home building centre suggests their retail credit card, so you can replace your drafty windows and save some money on your heating bill this winter.

Does this sound familiar? If so, you’re not alone. Canadians are going further and further into debt due to the over-extension of credit; in fact, our nation’s average debt rose 3.6 per cent between 2015 and 2016, then another 3.3 per cent in 2018 with the average Canadian owing close to $23,000!  

As a certified Credit Counsellor working for a not-for-profit credit counselling agency, I have seen the above situation play out far too many times. When it does, a very big portion of a person's paycheque winds up going towards just making minimum payments, leaving them to struggle to cover their basic needs and scrimping on groceries. This is no way to live. Sometimes people just need a little breathing room to get back on track. One solution might be debt consolidation, where you only have to worry about making one affordable monthly payment towards all your debts. 

Debt Consolidation Loans and Lines of Credit

Asking your bank for a low-interest debt consolidation loan or a low-interest Personal Line of Credit to pay off all your debts in full sounds great, right? 

But qualifying for either option involves an application process that takes into account the three C's: character (your credit rating must be in good standing), capital (your net worth and assets) and capacity (your ability to repay your debt).

Unfortunately, those in serious debt usually don’t make the cut. This is why many of my counselling sessions begin with the client saying, “I really don’t think you’ll be able to help me because I’ve already been to the bank and they would not approve a consolidation loan. I don’t qualify.”  

The good news is at Credit Canada Debt Solutions, our clients don't have to qualify in the traditional sense for our Debt Consolidation Program.

Debt Consolidation Programs

As a non-profit credit counselling agency, we never try to "sell" any particular option or solution to our clients. Instead, we will explore all financial options available to each client, depending on their particular situation, weighing the pros and cons of each option. This approach allows our clients to  decide for themselves which option is best for them given their goals, income and budget. Here's a bit more information on Credit Canada's Debt Consolidation Program:

  • It's a voluntary program where we consolidate all of your debts into a single monthly payment, often dropping the interest rates on your debts down to 0 per cent.

  • Your monthly payment is based on your monthly income and expenses, to ensure it's affordable for you and you can still cover your basic needs, such as groceries and dentist bills.

  • Your affordable monthly payment goes towards paying down your debt, not just paying the interest, so you can actually be 100% debt-free within a few years (some people can do it within 2 years, but most people complete the Program within 3-5 years). 

  • The plan includes detailed money management and budgeting information sessions, as well as financial planning and goal-setting for your short, intermediate and long-term financial goals.

  • Your counsellor sticks with you throughout the entire length of the Program, and you'll have access to your account online, just like you would your bank account, so you can see the payments going out and watch the balances go down!  

A Debt Consolidation Program is a great option for anyone interested in becoming debt-free but denied a debt consolidation loan or line of credit. The best part is that it offers a realistic solution to become debt-free without taking on more debt (what a concept!). If you think a Debt Consolidation Program might be the solution you're looking for, or if you'd like to get an expert's opinion on all your debt resolution options  for free — give us a call at 1.800.267.2272 and we'll set you up with a free counselling session with one of our certified credit counsellors. As a non-profit agency, all of our credit counselling is 100 per cent free, confidential, and non-judgmental, and you will never be pressured to take any course of action you are not completely comfortable with. We're only here to help!

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Topics: Debt Consolidation

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