Debt Settlement in Canada

What is debt settlement?

A Debt Settlement in Canada is an informal arrangement to reduce unsecured debts over $10,000 by as much as 70%. Also known as debt negotiation or a debt settlement agreement, this plan offers the opportunity to pay a one-time lump sum payment to settle all debts.

They say time is money and the true can be said when you’re handling debt. Debt Settlement programs can save time and stress as trained credit counselling deal with creditors on your behalf. Your dedicated advisor will draw upon their knowledge and experiences to negotiate a reduced payment to creditors – writing off a proportion of your debt.

A Debt Settlement can be a way to reduce your interest charges by consolidating debts into one payment and can help you regain control of your finances and reduce the daily stresses caused by debt.

How does debt settlement work?

The process of arranging a Debt Settlement is straightforward. If you find yourself in circumstances that could prevent you from paying your debts in full, creditors may be open to negotiating a repayment amount that is less than the full level of debt.

A Debt Settlement can reduce debt by up to 70%, however, this is dependent upon your current financial situation and varies for everyone.

An experienced and licensed credit counsellor will build your financial profile before approaching creditors to establish a Debt Settlement – ensuring they create a plan this matches your affordability.

Your advisor will contact creditors on your behalf and negotiate with them to secure a one-off lump sum payment to clear your unsecured debts.

Should I work with a debt settlement company?

A debt settlement company is a financial institution that specializes in setting up and managing debt solutions like debt settlement agreements and consumer proposals.

Because a debt settlement agreement is an informal debt solution, it’s possible for you to arrange one on your own. You could approach your credit card company with an offer of a lump sum payment, for example, and they may accept your offer.

On the other hand, debt settlement companies are experienced in negotiating settlements with creditors, which is why lots of people prefer to use an independent third party in the debt settlement industry, even if many companies charge a fee for their services.

It’s important that you make sure any debt settlement organisation you work with is a legitimate company. There are companies out there who may attempt to scam you so it’s important to stay aware – if a business makes claims that seem too good to be true, you should steer clear.

Will a debt settlement company help me deal with debt collectors?

A debt settlement company can negotiate with creditors and handle communications with debt collectors on your behalf. 

These companies will work to reduce the total amount of debt owed and arrange manageable payment plans, relieving you from the stress of dealing directly with debt collectors.

By taking over communications, they can often secure more favorable terms with the debt collector than you might achieve on your own, offering a structured way to address problem debt.

Am I eligible for debt settlement?

To be eligible for Debt Settlement you must be able to demonstrate that you are able to accumulate savings and income which will be able to cover the payment agreed upon with creditors within three years.

What debts can be included in debt settlement programs?

A range of unsecured debts can be included in a Debt Settlement. This is can include but isn’t exclusive to:

• Credit card debt – this is the most common type of unsecured debt in Canada.
• Retail / store cards
• Unpaid phone contract or cell phone bills
• Utility bills
• Non-government student loans
• Medical bills
• Other lines of unsecured credit

Secured debts can’t usually be included in a debt settlement agreement. If you have a mortgage taken out against your home, for example, you should continue making your monthly payments alongside the fee you negotiate with your creditors.

What are the benefits of a debt settlement program?

Lump-sum

Settle your debt with a one-off lump-sum payment agreed between your creditors and licensed debt management expert.

Support

Handling debt can be an isolating experience, often feeling like you have nowhere to turn to share your financial concerns as creditors seek their repayments.

A Debt Settlement plan can take the pressure off debt management as an expert negotiates with each creditor or debt collector to secure a one payment to clear your debts.

Reduced rate

Opting for a Debt Settlement plan can reduce debts by up to 70%. Experienced advisors use their negotiating skills and knowledge of previous cases to secure the best possible outcome for each individual client.

Consideration

A Debt Settlement is based firmly on your affordability and current financial circumstances.

Time

There is an expectation that Debt Settlement plans will be complete within three years.

Debt free

You will be debt free once your Debt Settlement plan ends, offering the chance for a fresh start and brighter financial future, although your debt may continue to have a negative impact on your credit rating after your debt has been settled.

Advantages of a Debt Settlement

• Securing a Debt Settlement is an alternative to filing for bankruptcy in some instances. Debt Settlement offers steps to help get your finances in order without facing the consequences of bankruptcy.
• Make the most of expert guidance and support to improve your financial profile. Managing debt often comes pressure and industry jargon, making the process of finding a solution to your needs more difficult. Experienced and licensed agents are on hand to guide you through the process of arranging a Debt Settlement with no gimmicks.
• Putting a Debt Settlement in place offers the opportunity to repay debts over a shorter period than the original payment schedule, allowing you to move on sooner rather than later.
• It is possible to settle your unsecured debts for less than you owe. An experienced team can help you to reduce your original debt by up to 70% through close negotiations with creditors.
• Debt advisors will not only provide an arrangement that keeps creditors and debt collectors happy but also suits your needs and current circumstances.
• There’s no denying that dealing with debt can be an isolating experience, with many people often finding it difficult to share their experiences with other. Seeking debt help can improve your quality of life simply by taking the time to discuss your situation and take the pressure off dealing with creditors on your own.

Disadvantages of a Debt Settlement

• Entering into a Debt Settlement will affect your credit score.
• Creditors are not obligated to agree to a Debt Settlement and may still demand payments and continue to charge interest.
• There are no guarantees regarding the amount of debt that can be written off in a Debt Settlement – every situation is unique and at the discretion of the creditors.
• You must be able to pay the agreed sum in full by the end of the statement, making this plan unsuitable for someone in financial hardship. If full payment isn’t made by the end of the term, there is no guarantee that the same offer will be made again.
• Only setting aside some of your money to deal with debt doesn’t improve your overall financial situation.

Is Debt Settlement right for me?

• Entering into a Debt Settlement will affect your credit score.
• Creditors are not obligated to agree to a Debt Settlement and may still demand payments and continue to charge interest.
• There are no guarantees regarding the amount of debt that can be written off in a Debt Settlement – every situation is unique and at the discretion of the creditors.
• You must be able to pay the agreed sum in full by the end of the statement, making this plan unsuitable for someone in financial hardship. If full payment isn’t made by the end of the term, there is no guarantee that the same offer will be made again.
• Only setting aside some of your money to deal with debt doesn’t improve your overall financial situation.

Are there debt settlement companies who can offer me debt advice?

If you want to know how debt settlement works, or are interested in exploring other debt relief options, talk to A. Fisher & Associates.

We can give you the financial advice you need to settle your debts and get back on track financially.

For impartial debt advice and more information on the options available to you, talk to one of our friendly advisors today on 416-842-0040.