In situations where debt is not too excessive and somewhat manageable, a credit counselling service may be able to review and assist you with your financial situation. These organizations contact creditors on your behalf, provide education on avoiding debt and personal budgeting strategies, as well as counselling. A credit counsellor will meet with you and determine how much you can pay each month towards your bills. The counsellor then works as...

With an informal debt settlement, you contact your creditors yourself to see if they can offer any options to aid your debt relief. If you work with a credit counselling organization, they will contact your creditors to negotiate your repayment terms and provide you with education and counselling.

Consolidating your debt is a good choice for those who have a satisfactory credit rating and sufficient income to pay back their debt in full. Individuals with higher debt, a lower credit rating or low income should consider pursuing a Consumer Proposal or Bankruptcy.

As this is not a formal legal process, you choose the debts which you would like to pay down with the new consolidation loan.

Depending on how quickly you take action and begin paying off your debt, debt consolidation should have little or no effect on your credit rating. However, late payments, failure to make minimum payments or being sent to collection can negatively affect your credit rating. The longer you wait to repay your outstanding debt, the more your credit rating will be negatively affected.

In order to qualify for debt consolidation, you must have a satisfactory crediting rating and sufficient income to sustain the loan. The financial institution issuing you the loan will conduct an assessment to determine if you meet their criteria.