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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Christine Sylver was very helpful to my situation. No question asked, she went above and beyond just to give me the options that I need to solve my problems. She explained and made me understand my options. Thank you Christine! Everything was done in a week. Regards, to Richard Sklar for explaining everything further to me. 😊
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I was blown away by how kind and empathetic Christine and David were. I came into the process expecting to feel embarrassed, but they were so helpful and unquestionably supportive, they made the whole experience a positive thing. On top of that, Christine found a solution for me that was better than I ever could have imagined. I highly recommend Christine, David, and colleagues to anyone.
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Christine Sylver has been very efficient in working with me in all aspects toward developing a very favourable consumer proposal which meets my financial budgeting very nicely. She also exhibited a very positive pro client attitude and was every pleasant to communicate with. Richard Sklar also demonstrated a very positive pro client attitude in explaining in detail all aspects. All great!!
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Dealing with Christine was a real pleasure.She was very understanding professional and knowledgeable she answered all my questions.I left feeling relieved a big burden was lifted from my shoulders
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Very happy I got in touch with Jackie! She has been a great help and a pleasure to work with! I highly recommend Jackie if you need help getting out of financial debt.
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I had the pleasure of working with Jackie and she made the experience very easy and was very honest which I appreciated as I was extremely nervous to go through with the process. Any questions or concerns I've had after our meetings were answered no problems and although it's been a few weeks I can honestly say I've never felt so stress-free. Very thankful for Jackie.
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Very considerate of how people can sometimes make mistakes and need help to get things back on track. Great team of people. Thanks to Jacqueline for all her help.
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My mother told me about this firm because they helped resolve her situation nearly 25 years ago. I had the pleasure of working with Christine Sylver. I should’ve done this years ago but I am where I am and it is what it is. Extremely courteous, professional and understanding. I hope to never need their services again but they would be my first call! A+
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Jerry was extremely thorough and ensured that as a client, I understood all of my options and their repercussions. He offered his professional advice best suited for my situation and he is amazing at his work. Thank you Jerry! :)
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