How does Debt Consolidation work?

Table of Contents

What is debt consolidation?

A debt consolidation loan lets you repay your debts to numerous creditors at once. Essentially you are left with one loan, to the company that issued the debt consolidation loan.

So far it sounds good right? There are other considerations you need to take into account.

With financial institution such as banks, you will most likely need to have a clean credit history, good home equity, co-signer and steady income. Also if collection agencies have started calling, or you have missed payments, you may not qualify for a bank loan.

Using Home Equity

If you use your home equity to obtain your loan, and, if you are unable to make your payments, then there is a chance that your home could be in jeopardy. While there are suitable reasons for using your home equity, using one’s home equity as collateral changes unsecured debt into secured debt which may or may not be a beneficial option.

Co-signers

With co-signers, this can put a family member or friend at risk if you are unable to make your payments.

Using Private Lenders

If you opt to not use a bank and go the private route, this can be costly in the long run as well. While the Ontario government has made changes to the Collection and Debt Settlement Services Act, R.S.O. 1990, c. C.14 to help protect debt consolidation customers, it still can be costly and not always the best solution. You may be required to put of some of your assets as collateral, and missing some payments could put those assets in jeopardy, and you would still owe the balance of that loan to the lender.

One of the disadvantages with a debt consolidation loan, is that it does not provide any legal protection with unsecured debt. It just transfers the debt from a group of lenders to one new lender. If you are dealing with high debts, wage garnishment or collection calls, before making a decision to consolidate your debts, It would be best to get a free consultation with a trustee. They can provide you with the best financial solution for your current situation. Having all the options laid out in front of you can help you make the right financial choice for you and your family, and know you are on the right path to getting back on your feet again.

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt, call us at 1-844-962-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

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Very knowledgeable, helpful and fast service
Anthony Mcfeat
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I am so delighted to have found this company. They are the best. Everyone in the office is very nice never to busy to assist you. Thank you David Sklar and Shirley and associates for being you. 😊🌺😊
Deborah
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Trina was amazing and quick. No judgement was made and they all made me feel I made the right decision. Would highly recommend them
Crystal Minaker
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Trina was very easy to work with. Any questions I had were answered promptly. What seemed like a complicated process was explained in a clear manner that wasn't at all intimidating. It made for a more comfortable experience during a turbulent time.
Eldon Aubie
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Jackie is very professional...I would recommend David Sklar to anybody especially knowing how understanding they are.
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I had Shirley and Kim take care of my finances. From the very first moment I spoke with Shirley I could sense how caring, professional and patient she was. She was also very understanding with my lack of financial knowledge and never made me feel dumb as some other companies have.Her and Kim were always very quick to respond to emails, always available if I called and answered my abundance of questions in such detail that I now believe I have a thorough understanding of how finances work. I am hopeful about my fresh financial start and very grateful I had the privilege of meeting and working with these two beautiful women.I also spoke briefly with Richard over zoom and he to was extremely friendly, patient and made sure I was well taken care of.I could not recommend David Sklar and Associates more. Thank you again.
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Good professional team! Jennifer is the best, helped me through everything and answered all my questions. Made the process easy! Would recommend Jennifer and the team at David Skylar.
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Christine and her team are amazing and professionals. I called for help and she responded right away to help me.thank you and I really appreciated for everything you do.
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Thank you so much for the helpYou took away the most stressful things in our lives which was our dept you guys are amazing and would recommend you to everyone
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The staff here are fantastic (Cori handled my visit) and are willing to go above and beyond to help people who need help, I recommend them 100% for people who are looking to move on in good standing.
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