If money feels tight right now, you aren't alone.
Many Canadians are struggling, with a perfect storm of economic conditions creating havoc. It also means debts are rising, and more people are finding it harder to meet those financial commitments.
If that's you, read on. This guide will discuss the options available if you need debt help. We'll explain how debt help works, your choices, and answer other pressing questions.
What Is Debt Help?
Debt help is an umbrella term for various debt strategies and debt relief. It's designed for people who are experiencing ongoing debt struggles.
That means they could struggle to pay, reduce or manage those commitments. These strategies offer a clear path to recovering from debt and regaining financial control.
Type of Debt Relief Programs
Debt help is available for credit card debts and personal loans.
Personal loans fall into the category of unsecured loans, which means an asset doesn't back them. You have several options if you have one of these loans but can't meet the monthly repayments.
The first solution is debt consolidation. That's useful if you have more than one loan or credit card. You move all your outstanding debt commitments into one loan.
It's often easier to manage and track and could offer a cheaper APR.
Another option is debt settlement. That's where a financial negotiator can work on your behalf. They'll aim to arrange with the lender to lower the amount owed.
Credit counselling is the third way of managing personal loan debt. Here, an expert provides practical help to you, such as budgeting, to ensure you can meet your monthly payments.
What Are Collections?
Collections are the most severe form of debt. In these circumstances, a lender will pass an obligation on to a third-party agency, commonly called a debt collection agency.
When that happens, the agency will negotiate a lower settlement and talk to you about a payment plan. However, though these ease the burden, they negatively impact your credit score.
Debt Relief and Credit Scores
Anyone with financial records will have a credit score detailing their financial dependability. When you fail to pay a debt on time or struggle to manage debt, that negatively impacts your credit rating.
Settlements will lower your score, as they are an action taken when someone struggles with debt.
The best way to improve your score is to pay off your outstanding loans quickly and avoid taking out new loans.
Debt Help Is Not One-Size-Fits-All
The best debt help is one tailored to your specific circumstances. What's right for one person isn't necessarily the best choice for another.
Consider your long-term financial picture, your ability to pay off the loan, and what will happen if your credit score drops.
Debt Help: Finding the Right Solution
If you need debt help, many solutions are available to support you. The most crucial step is to seek help to talk through your options.
At F. J. Zielski & Associates Inc, we are here to provide you with professional guidance about your debt situation. Start that conversation by booking a free consultation with our team.