FAQs Archive - Page 5 of 6

Q: Will I qualify for a non-profit debt management program?

If what you are looking for is a non-profit debt management program, only two need-based questions asked by your counsellor determine your eligibility: Do you need help repaying your outstanding debts? Could you repay your debts fully with interest or term relief? If the answer is yes to both and your counsellor feels that a debt management program would be both an ethical and affordable option, you’re approved.

Q: When is debt consolidation NOT the right choice?

You wouldn’t put up a picture with a wrecking ball or demolish a house with a hammer so why would you go bankrupt $500 or try to consolidate $500,000? Debt consolidation is a ‘hammer level’ solution to debt. If you can consolidate comfortably and affordably, it’s a good option. But the truth is, sometimes you need to knock the whole house down and rebuild on a better foundation. If you have borrowed more than you could comfortably repay (even with interest relief or a better term) consolidation is likely not the right tool for you.

Q: When is debt consolidation assistance the right choice?

Debt consolidation is the right choice if: You could pay your debts in full if interest was reduced You could pay your debts in full if you had more time to repay You could pay your debts in full if you only had one payment

Q: What are the 'cons' of debt consolidation?

Depending on the amount of debt you owe you may not be able to afford to consolidate if the resulting monthly payment is too high. Consolidating with the wrong type of lender or with a for-profit debt agency could end up costing more in fees or interest in the long run. Avoiding consumer proposal or bankruptcy when it is genuinely a better option may compromise your financial safety and well-being.

Q: Is credit counselling a form of debt consolidation?

Credit counselling is not a form of debt consolidation, it is a debt conversation with an accredited credit counsellor who provides an overview of your money management options. However, credit counselling agencies do offer negotiated consolidations in the form of low-or-no-interest debt management programs.

Q: How does debt consolidation work?

How debt consolidation works will depend on what type of debt consolidation you choose, but any consolidation should provide three basic benefits: A single monthly payment A lower overall interest rate A reasonable repayment timeline

Q: Can you keep your house in bankruptcy in Canada?

The short answer is yes, but the real question is not can you keep your house in bankruptcy in Canada but rather, can you afford to keep it. In a bankruptcy, you must always offer your creditors MORE than what they would receive if you liquidated (sold) your assets to pay them. That means the more equity you have in a property, the more debt you will have to repay in your bankruptcy.