Debt consolidation is something many people facing debt problems will consider at some point or another. If you have poor credit, getting a debt consolidation loan at a reasonable interest rate might be difficult, if not impossible. Your next option may be a Debt Consolidation Program, which doesn't require a loan at all—great news for anyone trying to get out of debt. If you've signed up for a Debt Consolidation Program, or considering one, the following tips will help make sure it's a complete success.
What is a Debt Consolidation Program?
If you've explored your debt relief options, you've probably come across something called a Debt Consolidation Program, also known as a debt management program. A debt consolidation program is a great option for anyone who's tried to get a debt consolidation loan, but either couldn't get one because of bad credit and/or they don't own a home to use as collateral; or perhaps they did qualify for one but the interest rate was so high that it would have done more damage than good.
A Debt Consolidation Program is a repayment schedule a certified Credit Counsellor from a not-for-profit credit counselling agency creates for you based on your monthly income, expenses, debt payments, and assets. They will negotiate with your creditors to drop the interest rate on your debt, or stop it completely, to give you some breathing room to catch up. They will also negotiate a payment schedule you can afford with a specific end date, so you can pay off your debt in a timely manner while still being able to keep up with your regular everyday expenses, like groceries, housing costs and utilities.
How to make your Debt Consolidation Program a complete success
If you've decided a Debt Consolidation Program (DCP) with Credit Canada Debt Solutions is the best way to deal with your debt problems, congratulations! At this point you might be thinking your work is over, but it's only just beginning. To be successful with your Debt Consolidation Program, it's important that you follow through with your commitments and accept your new responsibilities.
Make a commitment to pay off your debt
By entering into a Debt Consolidation Program, you are making a commitment to your creditors to repay your debts. Your creditors have accepted the program and possibly waived or reduced the interest charges based on the payment proposal made to them by your Credit Counsellor, on your behalf. It's important to remember that your creditors are helping you in accepting the proposal; you aren't doing them any favours, as you do owe them the funds you borrowed. Keeping this in mind will help you stay positive when making payments.
Be honest with your Credit Counsellor
Your Credit Counsellor is your best friend when it comes to getting debt-free. Make sure you are honest and upfront with your Credit Counsellor and declare all income, expenses and debts you have no matter what they are. Your Counsellor will never judge you, so the more honest you are, the more likely you are to succeed with your Debt Consolidation Program.
A Debt Consolidation Program is a custom repayment schedule created for you based on the information you provide. You can’t be successful if the information doesn’t reflect the true picture of your situation. As a Credit Counsellor, we're here to assist you in repaying your debts, but we can’t help you properly if we don’t have all the information.
While on a Debt Consolidation Program, your creditors are expecting to receive their payment each and every month, but there may be times when you find it difficult to make a payment by the requested date. If that's ever the case, it's very important that you notify your Counsellor and provide the reason for the late payment and a plan for catching up.
Understand all the terms you are agreeing to
When you sign up for a Debt Consolidation Program, you will be asked to sign a Deposit Agreement. It's absolutely crucial that you fully read this agreement and understand it completely. If you're not sure about something, or a certain section is unclear to you, ask! Ask as many questions you need to in order to have a clear idea of what is required of you and what you need to do to be successful. Especially note the monthly payment amount and monthly due date.
If you sign up for a Debt Consolidation Program with Credit Canada, you will be making a set payment by the 15th of every month. This information is provided to your creditors when they are sent your Debt Consolidation Program proposal, and if the proposal is accepted, they are expecting your full monthly payment by they 15th of every month.
Let's say you agreed to pay $315.75 starting November 15th, 2019. That means you must have that full amount in your account by November 15th and every month thereafter. The payment isn’t $300 or to be paid whenever you have the funds. This is very important as your creditors can default the program if there are missed or partial payments, and then you're back to square one.
Timing is everything: Make your monthly payments on time
You need to establish the correct payment due date right from the beginning of your program. For example, if your income is a government pension that is paid at the end of every month, you and your Counsellor will need to arrange for your Debt Consolidation Program payments to start the 15th of the following month.
So let's say your first payment on the program is scheduled for November 15. You can't expect your pension paid in November to cover your November 15th payment, because you won't have it by then. That means the pension you receive in October is meant to be used for the November 15th payment, and the pension you receive in November will be used for your December 15th payment, and so on and so forth.
It's very important that you organize your finances right from the beginning of your program, and don’t wait until the 15th to say you can’t make a payment! You'll be behind in payments the very first month of your program, which creditors do not like. And remember that it can take 2-3 business days for your payment to be posted to your account, so don't wait until the payment due date to make your payment. Give yourself a few days in advance to make sure your payment isn't late. (Good advice to follow when paying your other monthly bills, too.)
Ongoing help is available while on a Debt Consolidation Program
Your Counsellor will have created a budget for you that you can follow to make sure you are meeting all of your financial commitments and obligations. This spending plan will allow you to be in control of your finances. Ask your Counsellor for further assistance if you are struggling with sticking to your budget. Throughout your Debt Consolidation Program, you will have review appointments to go over any changes in your circumstances that might impact your success and budget. It's important to ask any questions you may have or to request an appointment if you require further assistance.
No new debt while on a Debt Consolidation Program
When you sign up for a Debt Consolidation Program, you agree not to take on any new debt while on the program. This includes credit cards, loans and payday advances. Your creditors have essentially bent the rules for you in accepting reduced payments and even possibly waiving their interest charges. It's not fair if you then turn around and take on new debt and pay full interest on that debt. Your creditors expect to be treated fairly during the program, and you want to be debt-free so taking on new debt doesn't work for you either.
A Debt Consolidation Program with Credit Canada could be the debt solution you need
A Debt Consolidation Program can ease your stress and help you repay your debts if you keep up with your end of the deal. It will take time, but our clients say it's worth the effort. If you are struggling with your debts, help is just a phone call away. Call 1.800.267.2272 to schedule a confidential, one-on-one appointment with one of our certified Credit Counsellors. All of our counselling is free and we never judge. The time to take control is now.