If you are a Canadian citizen facing an exceptionally long term difficulty in finances, the solution can be debt reduction. The condition of being out of school for a minimum of five years will also add to the advantage of this debt reduction that you can make use of in the country. You can avail debt reduction repayments as student loans only for those in the country of Canada if the total reduction goes up to something around twenty six thousand dollars. defined debt reduction as the process of reducing your debt balance through a systematic approach to repaying your debt or the use of a financial manoeuvre to improve your debtor position. Refinancing and reorganization of debt are two strategies used by companies and individuals to reposition debt for more efficient payoff. Debt relief companies also assist those in over their heads with debt by negotiating with creditors.

What is the Importance of Debt Reduction Programs?

Last year, the K & G Debit & Credit Professionals came up with an article that stressed the need for debt reduction programs in an article Consumers in Crisis: Debt Reduction Programs Required. It said that 86% of Canadians aged 19 to 64 live in households which carry debt. With the Bank of Canada’s warning of an impending rise in interest rates the consequences for Canadian consumers will be devastating. It is imperative that consumers who anticipate being adversely affected by the interest rate increase be proactive and consider the options that are available to them should they need help with their debt. Debt Reduction programs will play a vital part in providing this help. Bonnie Krisher, founder of the debt Settlement Company K&G Debt and Credit Professionals, urges those consumers who are already struggling financially to educate themselves on the debt reduction services available to Canadians and the pros and cons of each.
According to Krisher, there are four types of debt reduction programs available to Canadians:
  • Debt settlement, also known as debt negotiation or debt arbitration.

  • Credit counselling.

  • Debt consolidation.

  • Bankruptcy/bankruptcy proposal.

What are Debt Solutions?

One of the common debt solutions is called debt consolidation which is merely transferring the debt from many loans into one new loan. This will possibly have lower monthly payments than the ones you made before but the amortization period will be longer and that is how the debt consolidation company makes their money, interest collected over time.
Consumer proposal is another popular method. It allows you to to merge all of your debt into a single monthly payment while also lowering what you owe overall. A licensed trustee will approach your creditors with a proposal to reduce your debt and monthly payments to achieve debt reduction for you. You should have a minimum of $5000.00 in unsecured debt or maximum of $250,000.00 to take this course of action. Additionally, you are required to prove insolvency and maintain the payments, which are generally set up over a three to five year period. Your monthly payment will typically be 2% of the principle allowing you to achieve debt relief quickly.
Credit counselling is another option available to those who are looking to leave their debt behind without climbing farther in or increasing their monthly payments. It allows you to sit down with a financial professional to evaluate your economic viability and how much you can really afford to pay on what you owe. This form of debt management is more educational than anything else and many consumers benefit from the consolidation of payments. However, consumers often find that this process does not offer a significant enough reduction in their monthly payments to be a viable debt relief option.

What is Deb Settlement?

Choosing debt settlement as a debt relief option may be a good alternative because it features a lower monthly payment and the opportunity to reduce debt principal and not just interest rates. Attempting to setup a debt settlement yourself is feasible but is a risky proposition since most Canadians do not have a close relationship with creditors while debt settlement companies do. A good debt settlement company maintains close relationships with the majority of major creditors and knows when to negotiate and how to maximize the savings for you. It is an agreement between you and the bank whereby the bank agrees to reduce the principal in exchange for an agreed upon payoff, either in a lump sum or over the course of an agreed payment plan. The bank agrees to the settlement because they realize that you are in a position of hardship and that the alternative could mean they get nothing through a bankruptcy.

Act before it is too late

If you suddenly find yourself submerged in debt, the effects may be disastrous. In today’s society, money and credit are a part of a person’s daily life. If you fall past due with your creditors, your credit rating will suffer and it will become very difficult to secure financing for the purchase of a vehicle or real estate. Your problems do not stop there. You will never know when a financial emergency may arise. It is therefore important to seek out debt help before it is too late.


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