DEBT STRATEGIES

OVERVIEW OF DEBT OPTIONS

Many people find themselves struggling with huge debt and no way to manage it. A sudden change in income, emergency, or other unforeseen events can knock anyone off their financial feet. Here, we compare 6 different strategies for managing debt.

Here, we compare 6 different strategies for managing debt. For more in-depth information about how to control your debt, download our free debt management guide.

CHOOSE YOUR OWN DEBT STRATEGY

WHAT IS IT?
PROS
CONS
CREDIT COUNSELLING

A counselor reviews your financial situation, sets up lower interest rates with your creditors if possible, and creates a debt management plan for you to follow.

PROS
  • One monthly payment
  • Lower rates and fees
  • No collection calls
CONS
  • Lenders may view you as credit risk
  • Principal debt not reduced
  • Credit card accounts closed
DEBT CONSOLIDATION

You take out one loan to pay off all your debt. This loan may carry a lower interest rate than your debts. You make fixed monthly payments on the loan until it is paid off.

PROS
  • One predictable monthly payment
  • Flexible terms
  • No credit impact
CONS
  • Need good credit
  • No reduction on principal
  • Results vary
CASH-OUT REFINANCE

Requires you to work with a mortgage lender. You refinance your mortgage, taking out additional cash beyond the mortgage balance. You use that money to pay your debts.

PROS
  • High-interest debts paid off
  • Reduced monthly payments
  • Tax-deductible interest payments
CONS
  • Need to own a home
  • Increased foreclosure risk
  • Adds to mortgage debt
DEBT SETTLEMENT

Working with a company, you make monthly deposits into an account. The company negotiates with your creditors to accept less than the debt owed. That amount is then paid to creditors, from the account you deposited into until the debt is resolved.

PROS
  • Significant savings over making minimum payments
  • One low monthly program deposit
  • Faster than making minimum payments
CONS
  • Debt collection calls
  • Legal risk, impact to credit
  • Results vary
CONSUMER PROPOSAL

A legal process. Financial positions is evaluated and used to assess payment plan to pay off your debts. Once proposal is complete, you are relieved of the debt obligations you had before filing proposal.

PROS
  • Debt obligation be cleared and principal could be reduced
  • Creditors are barred from attempting to collect on debts
  • Debt free in only 2-5 years
CONS
  • Impact to credit
  • Credit card accounts closed
  • Results vary
DO IT YOURSELF

Using various online and offline tools, you determine the exact payments required for each debt and track your progress as you go.

PROS
  • Optimized payments
  • No required costs
  • No credit impact
CONS
  • Requires strict budgeting
  • Interest rates don’t change
  • No reduction on principal

Learn More About Your Options

By understanding and knowing which option is best for you, your road to debt freedom can be paved for success

DEBT SETTLEMENT

Settle your debt by working with your creditors to reduce your principal balance.

DEBT CONSOLIDATION LOANS

Consolidate all of your existing debt into one loan with a lower interest rate.

CREDIT COUNSELLING

Learn how to live on a budget while reducing your interest rates.

CONSUMER PROPOSAL

Avoid bankruptcy and keep your assets by reducing the amount of debt you owe.

BANKRUPTCY

Filing for bankruptcy has consequences and should always be considered a last resort.

CREDIT CARD DEBT

Get rid of the debt you owe on your credit cards.

Menu