This broad and rather ambiguous term can have lots of implications depending on the person in question, the situation, or what the expected outcome is. It is frequently misused by individuals when they are referring to an economic course of action.
Debt consolidation is used to manage your finance. It is a strategy whereby a borrower applies for a loan to pay off other loans. It is done in order to qualify for a lower interest rate and for the ease of one monthly payment over an extended period of time.
If you are battling with series of debt servicing payments each month (student loans, lines of credit, retail cards, credit cards, etc.), or you may be looking forward to simplify your bill payments. This will often mean combining your payments into one so as to reduce stress and complexity in your life.
A number of trustee in bankruptcy Toronto in Canada such as Cooper & Co. Ltd, provide debt consolidation services. Usually this involves including some of your debts into a single payment to their organization. This is not a loan per se; it is a negotiated payment plan involving the creditors. These companies need to be successful in the negotiation with creditors, and there is no guarantee that the creditors will consent to it. Again, there is no legal obligation on the part of the creditors to stand by or agree to the arrangement. You may be expected to pay a significant fee up-front as well, and you will most likely end up with a good amount of your debt which was not included in the deal.
The trustees are not licensed operators; they are companies which promise negotiations which the creditors may not participate in. Hence, it is debt consolidation for the creditors who are willing to agree to the deal. It often applies to credit cards and not lines of credit or payday loans, student loans, income tax owing etc.
Also, there are debt consolidation & management Toronto in Canada who offer to dramatically reduce your debt through a ‘new government program’ where you make a single monthly payment to all your unsecured creditors at a very reduced amount. In this situation, the company is basically acting as a referral source on your behalf. This means you will be paying a fee to speak with an individual whom you could have met with or spoken to for free. The government of Ontario came up with a bill in 2015 to deal with this sort of misleading practices against consumers.
If you are overburdened with servicing a bunch of small debts, the right thing for you is to secure a loan to consolidate your debt. It is difficult to manage money particularly when you are trying to handle a huge number of debts which all attract high interest rates.
Do not breakdown due to large debt. Cooper and Co. Ltd offers an affordable open loan to individuals with bad credit in the GTA and Toronto.
Cooper & Co. Ltd.
1120 Finch Avenue West