Canadian Debt Settlement and Debt Assistance Companies

Canadian Debt Settlement

Debt Relief for Canadians

Debt is at an all time high for many Canadians. A shrinking middle class, rising costs for things like fuel, food, housing and utilities and of course the usual costs for things like travel, ‘toys’ and other things have all conspired to make Canadians more heavily in debt than ever and it’s costing them. Stringent requirements for mortgages means that any amount of debt has a serious impact on first time home buyers and their ability to buy a new home and problems with debt make it hard to get ahead in life, making many people feel as though they are stuck in a hamster wheel. Compounding this is the fact that many interest rates are high (particularly on credit cards) and this makes many people feel as though they are constantly throwing money into a well which will never fill up.

Sound familiar? You’re not alone and that’s where things like debt settlement and debt assistance comes into play. So how does that work?

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How Does Debt Assistance Work?

Debt settlement and debt assistance companies help clients by decreasing the amount of debt they owe, often by up to 75%. This means that you pay significantly less and over a set period of time which makes figuring out your monthly budget a lot easier and with less stress. Companies which works in debt assistance have a couple of ways that they help their clients get out from much of their debt.

1) The Wait Them Out Approach. Simplistically speaking, it’s like hiding under the table in a dark room every time the landlord comes to get the rent and then waiting until he gives and goes away.

Ok, not exactly. The idea behind the primary tactic of these businesses is to stall creditors with bits and pieces, promises and negotiations until the creditor gives up and takes a fraction of their money back from clients. This is of course rather risky because some creditors will do things like harass the clients, threaten law suits and put liens on pay checks to get their money back, but other times it works just fine. The end result? Someone owing tens of thousands of dollars in debt only has to pay back a percentage of that overall.

2) Negotiating on your Behalf. The best method, though the one that takes more time and effort, is to negotiate with creditors on the behalf of the client. Debt assistance specialists in this case do things like negotiate for lower interest rates, payments made free from interest, set time periods for payment (in return for a lower amount owed) and other things. This is the safer route to go as most creditors are always happy to at least get some of their money back as long as everyone is communicating.

Good debt settlement companies will also work with you to create a budget, teach you how to manage your debt and generally work with you so that you won’t make the same mistakes twice!

How Much Does This Cost?

Generally speaking, you’ll have to pay some sort of fee upfront, usually not a very large one (if it is large, you might not want to work with that company). Then the settlement company will begin negotiations on your behalf and in that time, you will have to start making monthly payments which are usually lower than what you were initially paying. Depending on the company, the first few payments actually go to them to pay for things like maintenance and the work and then after that, it goes to your loan principle. It’s important to shop around a little as you do have options and there’s no reason to think that you have to pay a ton of money for the service.

If you decide to go this route in order to help bring your debt down, there are a couple of things you have to keep in mind. The first one is the fact that you will need a certain amount of unsecured debt; usually 10K or more in order to be eligible. Credit card debt is the most common type of debt to use these services with as it generally has the highest interest rates. Second, make sure that the company you wish to work with is one that you can trust and will feel comfortable using. And finally, make sure you have plans laid down to ensure that you never run into debt trouble again!

It can be really hard to get out of debt once you pass a certain point of no return. High interest rates and problems making monthly payments means that many people feel as though they’ll be in debt forever. If this sounds like you, then enlisting the help of a debt settlement or debt assistance company may be the way to help you get out from under your debt and get your life back on track.

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