The Most Common Reasons Canadians are Unable to Get a Debt Consolidation
Learn more about why you may be unable to obtain a debt consolidation.
Facing debt has become, unfortunately, all too common. But there are various debt solutions available to individuals struggling with their finances to help them overcome what is hopefully a temporary time. A licensed insolvency trustee is an effective resource when it comes to working with debtors and reviewing options before determining the best course of action for them to take.
A debt consolidation is one such solution available if you need debt help, but keep in mind that you must be eligible to receive one. The appeal of this option is amalgamating the debts you owe to your creditors to make one payment, while simultaneously lowering your interest rates. In some cases, people may not qualify.
Not having security, collateral or a large enough income
Without being able to offer assurance to a financial lender that you can pay them back when you are already pursuing them in the first place because you owe money, a debt consolidation loan may not work out for you. If you require credit cards or an unsecured loan, both of which have high interest rates, you may make matters even worse for yourself by owing more in the long run.
While it can be effective, certain debt solutions can create further complications if you are struggling to pay off credit cards at the same time. A debt consolidation loan can make payments to creditors much easier to manage, but can only afford to pay the minimum amounts each month to their credit card while using this debt solution, which usually must be paid off within five years. Individuals not earning enough money from their salaries to afford this can be rejected when they apply for a debt consolidation loan.
Poor credit report, low credit score, or not enough credit history
Having poor credit history, a low score, and unflattering report can pose significant problems in general for people – let alone when they try to receive debt help in Ottawa. If you already owe money, as is likely if you are considering a debt consolidation loan, chances are your credit score and credit rating are not in pinnacle condition.
By the same token, not having enough credit history in the country can make it similarly difficult to receive a debt consolidation loan. It may seem ironic, but using credit cards actually helps your financial situation – so long as you are not exceeding your limits and making timely payments each month. Equifax and Trans Union are the two primary Canadian credit reporting companies with which you can check to see how you fare.
Do you owe too much money to receive a debt consolidation?
If your total debt is greater than 40 percent of the total income you earn, financial institutions you approach will only loan you a potentially smaller amount of money for a debt consolidation. Debts in this case include credit cards, mortgage payments and other loans, creating your total debt service ratio. Despite the temptation some individuals in debt may feel, experts do not recommend turning to less credible banks to obtain a debt consolidation loan.
Speak With a Licensed Insolvency Trustee to Find a Solution That’s Right For You
People who owe money find themselves facing understandable stress. It can be difficult to know where to turn and how to rectify the cycle of owing money, but it is not a unique problem. There are several debt solutions available for this reason, including a debt consolidation.
To review your options and decide on the best course of action for your circumstances, speak with a licensed insolvency trustee in the Ottawa area from D. & A. MacLeod. Financial advisors can offer significant debt help to individuals who owe money to their creditors.