Archive for the ‘consolidate’ Category
I received a call today from a Debt Consolidation Company planning to expand into Nova Scotia. They were looking for a Trustee to refer business to. We chatted about what they needed and what they offered to their clients.
He informed me that their objective is to help individuals find the best solution. I thought, “Us too!”. He explained that they have individuals complete an assessment package to assist them in determining the best option. And I thought, “We do that too!”. He further offered that they charge the client a fee for this advice. And I thought “We DON’T do that!”. Our consultations are free. Yet, these credit counselling companies are popping up AND, apparently, expanding.
He indicated that many people call them because they are afraid of the “B” word (that would be “Bankruptcy”); and I totally get that. Bankruptcy should always be your last option and we strive to help individuals find solutions other than the “B” word. In fact, and we pride ourselves on this fact, approximately 40 percent of the people who walk through our doors, walk back out again. Not because we couldn’t help them, but because we helped them to find an alternate solution. And it didn’t cost them anything. Other than, perhaps, the embarrassment of talking to a Trustee in Bankruptcy.
Which leads me back to “the cost of embarrassment”…it seems to me that if you are struggling financially, perhaps you would be better off not paying a fee for a service that you can get for free.
There is a movement in the bankruptcy industry to change the title from Trustee in Bankruptcy to something that better reflects our wide range of advice/services. I would say that’s a movement in the right direction.
What comes to mind when you hear the word “Consolidation”? Do you envision all of your debts being ‘paid off’ leaving you with the manageable obligation of one monthly payment? If so, you are thinking about a “Consolidation Loan”. A financial institution loans you money by paying off your debt and you pay them back. With interest, of course.
Nowadays, the word “consolidation” is being used in a much more liberal term. Many debt-relief agencies offer to “consolidate your debt”. The process is quite different. Your creditors are approached and offered a settlement. That settlement could be in full or in part (a percentage of what you owe) and could result in an elimination or reduction of interest.
In the Insolvency Restructuring Profession we call this “consolidation” or “settlement” a Consumer Proposal
So, what is the difference between a “consolidation loan” and a “debt consolidation”?
The most important distinction is the effect on your credit rating or score. A consolidation loan will not affect your score in a negative way and may, in fact, improve it. A debt consolidation, on the other hand, WILL impact your score negatively, the extent depends upon your credit score at the time of the ‘consolidation’.
A friend recently asked me if I could recommend a reputable debt consolidation company that will not impact your credit score. My answer was “Nope, they don’t exist!”. If you find one, let me know!!
(Blog submitted by 3rd party) / Author: Robin Williams
[Please note that the poster does not offer any recommendation for sites linked to these articles and cautions readers to use good judgement in contacting a company for assistance wth their finances.]
If you have multiple debts, you may face difficulty in making all your bill payments on time. In such a situation, like everyone, you too will wish to get rid of your bills. You can pay off all your bills by obtaining a consolidation loan. You can also seek help from professional debt consolidation companies. They advise you and offer you services to tackle your debt problems.
How can you benefit by professional debt consolidation advice?
Professional consolidation companies provide you with financial advice and help you combine multiple bills into one. They also offer you other benefits. These are:
* Free counseling: A certified counselor of the company will analyze your monetary situation and will help you determine your financial goals.
* Communicate with creditors: A representative of the consolidation company will effectively communicate with your creditors. Your creditors may stop harassing you with collection calls.
* Negotiate to reduce interest rate: The representative will negotiate with your creditors to reduce the rate of interest on all your bills.
* Eliminate other charges: The company representative will also negotiate with your creditors to help you eliminate or reduce late charges and over limit fees.
* Convenient repayment plan: The consolidation company prepares a repayment plan for you based on your credit needs and gets it approved from your creditors.
* Replace multiple payments with one: Instead of making separate bill payments, you have to make a single reduced monthly payment to the consolidation company and they will disburse it on time to all your creditors.
* Become debt free: With the help of a professional consolidation advice, you can pay off all your debts within 4-6 years.
There are also various non-profit debt relief companies that offer debt consolidation programs. By enrolling in one such program, you can obtain relief services at a lower cost. However, you must remember that there are less reputable companies. So, you must verify the company’s status before seeking consolidation advice from them. You must check its accreditations.
For details on all of your options, and an outline of the benefits and disadvantages of each, contact Dr. Debt (info@drdebt.ca) to arrange free consultation.
Recently, I received a question on this site, asking about our credentials – a very important questions. Given the broad range of “advisers” out there in both the real world and the world-wide web, you never really know who is imparting their knowledge on you, do you?
So, I thought I would take a moment and tell you about us…
As I write most of the posts, I will start with my credentials. I have been working in the Financial Counselling / Bankruptcy industry for 12 years. My training has been a combination of professional training and experience. I obtained my financial counselling certificate from The Association for Financial Counseling and Planning Education (AFCPE) while working in this industry. Nowadays (is that word actually in the dictionary?), the Financial Counselling Program is coordiante by the Office of the Superintendent of Bankruptcy and the Canadian Association of Insulvency Restructuring Professionals. More importantly, I feel that I have personally made most of the financial mitakes I write about.
Enough about me…we are supported by our Trustee, Darryl Haley, who has more than 30 year experience dealing with individuals and businesses in everything from money management to business turn arounds. He hold a CA designation and Trustee in Bankruptcy license.
In addition, we have several staff members with a wealth of training and experiences who talk to people every day about their financial situation and we draw upon other business colleagues and experts in their fields, to bring you relevant advice and experience.
So thank you for asking!
(Do you have a question for Dr. Debt? Click on “Ask Dr. Debt” and watch for a post addressing your question.)
Wonderful, accessible, way-too-easy-to-get, way-too-hard-to-pay-off, credit.
It makes the world go around and sometimes makes our head spin. It can be our best friend or our worst enemy. Using it gives you a temporary high. Owing it gives you a long-lasting headache.
Where am I going with this you ask? I shall tell you.
You sort of fall into credit use much like you fall into those early relationships of our youth. Often it happens by chance (an offer in the mail or you’re walking through the mall), it looks exciting, promising. You focus on how it will enrich your life and enable you to move towards your goals (owning a car, house, travelling, etc.). And for a long time all is good. Its manageable. And because you are managing it, you get offers for more and better credit (ok , not sure if that parallels so much in relationships). And then! One day! You realize! The honeymoon is over and you actually have to work a bit harder, make some sacrifices, actually live on – dare I say it? – a budget.
At some point throughout that process you have what Oprah calls an Aha Moment and you realize just how much credit (or the credit system) has used you versus you using credit. And you settle in – hopefully – to a new relationship with credit. A mature relationship. Sometimes it lasts (you reduce or eliminate your debt and change the way you use credit). Sometimes you redefine your relationship (consolidate or enter into a debt-reduction strategy). And sometimes you break up (bankruptcy).
My wish for you is that you develop a strong, eyes-open, respectful relationship right off the bat. Or at least work through the issues early enough to learn, and grow, and make credit your friend. If your relationship with credit is on rocky terrain, seek help early. I believe marriage counselling should be mandatory before signing the marriage certificate. And financial counselling should be mandatory before signing the credit application.
Feel free to visit our site for guidance on financial issues www.haleyrustee.ca , or contact me and ask me how I can help you maryann@haleytrustee.ca
Do you have an experience about your relationship with credit that you would like to share? Use our comment feature and share with others.
I will often tell my clients, or anyone who will listen for that matter, that we are all one or two events away from bankruptcy. What do I mean by that? I mean that all it takes is one or two major events, such as an illness, a layoff or a divorce, to turn our financial world upside down. The reason is simple. We live too close to, or above, our means. As a result our credit is maxed out, our savings minimal, or worse, non-existent, and we have absolutely no breathing room. When a major event happens you quickly get behind to the point where catching up is a challenge. And that’s IF your situation improves. If it does not, you dig a deeper, darker hole.
The solution is so simple. Ok, I say that recognizing that once you are in trouble financially, it takes time, patience and hard work to get back on track. Generally speaking though, you need either savings or available credit to get you through the tough times. Obviously savings is best. But having unused credit can help bridge the gap if savings are unavailable. I do offer a word of caution – “if you are going to use credit, you need to be very, very organized and have a well thought out plan”. Otherwise, the risk is great that you will get in over your head.
If your credit is maxed and you have no savings, you need to start a debt reduction strategy immediately. Beginning a savings account while reducing your debt makes the most sense, as this will eliminate or reduce your dependency on your credit to get through those expenses that pop up both expectedly and unexpectedly. There are many options for reducing your debt, from establishing a budgeting plan, to refinancing, to offering creditors a settlement on the amount you owe. The following link will provide you with some information on specific services designed to help you reduce or eliminate your debt. http://www.haleytrustee.ca/solutions.php
If you’ve found yourself in a cash flow crunch for an extended period of time, you may have noticed how much it costs to be broke. If you haven’t noticed, please let me enlighten you.
First, there is the cost of NSF charges. Want to increase your heart rate and your stress level quickly? Log on to your online banking and see that NSF notice. And as if that’s not bad enough, the intended recipient of the funds has a charge for you too.
Now here’s a procedure that adds insult to injury. When you fall behind on your credit card payments, the companies increase the rates. Thanks guys! I’m already struggling with the minimum payments, this will help greatly! (Sarcasm noted?)
I understand the logic – somewhat – you’re a higher risk so they need more insurance against you defaulting. But doesn’t the increase in your rate make you an even greater risk?
Speaking of higher interest rates, if you are fortunate enough to find someone to help you refinance, you will pay a higher rate of interest for the same reasons as noted above.
Honestly! Who can afford to be broke?
Solution: Although there is no way to totally avoid this, here are some suggestions:
- If you run a tight account, keep a close eye on your bank account. Make sure you know exactly what is coming out and when and have it written down. Check your account regularly (online banking is especially useful in this regard)
- If you know you cannot make a payment, call the recipient and ask if you can have it stopped or moved to another date. If you are too late, contact your bank and put a stop-payment on it. The fees are a lot less than an NSF.
- Strive always to make at least the minimum payment on your credit. That way, you are at least up to date. If you are unable to, contact the credit company to see if they will allow you to make interest-only payments or defer a payment.
- Look at your options early. Often refinancing may be an option if you look at it soon enough. If you wait until you are behind, your options diminish greatly
- Finally, seek outside guidance. Just because your bank says no, it does not mean no one else will look at you, and your banking representative may not have the resources necessary to point you in another direction. Contact a professional (like me!) to help you explore ALL of your options.
Do you have an example of the cost of being broke? Offer your comment above!