A Complete Introduction to Debt Consolidation in Alberta

A Complete Introduction to Debt Consolidation in Alberta

Debt consolidation has emerged as a popular and practical solution for many Albertans struggling with multiple debts. By partnering with Blanchard & Company, the preferred debt consolidation company of Central Alberta, you can combine all your debts into a single loan with a lower interest rate and manageable monthly payments. This article will be a complete introduction to debt consolidation in Alberta from the advantages and disadvantages of debt consolidation, the various types of debt consolidation loans available, and how to select the right Licensed Insolvency Trustee (LIT) in your area. With this knowledge, you’ll be better equipped to decide if debt consolidation is an ideal option for you.

Advantages and Disadvantages of Debt Consolidation

Debt consolidation offers numerous benefits for Albertans. By consolidating your debts, you can secure a lower interest rate, ultimately saving you money. It also simplifies your finances, as you’ll only need to make one monthly payment instead of managing multiple payments with varying interest rates and due dates. This can alleviate stress and make budgeting more manageable.

There are also potential downsides to consider. Debt consolidation may extend the repayment period, which could result in paying more interest over the long term, depending on your situation this isn’t always the case. Additionally, fees associated with the consolidation loan, such as origination or balance transfer fees, may apply. Lastly, your credit score could temporarily decline as you close old accounts and open a new one, but responsible repayment of the consolidated loan can improve your score over time.

Unfortunately, individuals who would most often benefit from consolidation loans do not qualify either due to low income, an adverse asset to debt ratio, or a poor credit score.  Often these individuals will only be approved for a high interest consolidation loan where by the end of the term, the individual has repaid more than double of the principle owing.  For these individuals, a consumer proposal is likely a much better solution

Types of Debt Consolidation Loans

debt consolidation loan

Central Albertans have several debt consolidation loan options:

Personal Loans: Unsecured personal loans can be used to consolidate high-interest debt, such as credit card balances. These loans generally have fixed interest rates, set repayment terms, and require no collateral. However, a good credit score is necessary to qualify for the best rates.

Home Equity Loans: This type of loan enables homeowners to borrow against the equity in their property. Home equity loans offer lower interest rates than personal loans but require your home as collateral, meaning you could lose your property if you default on the loan.

Balance Transfer Credit Cards: Some credit card issuers offer promotional balance transfer rates for new customers. You can transfer your high-interest credit card balances to a new card with a lower interest rate, often for an introductory period of 6-24 months. Be aware that balance transfer fees may apply, and the interest rate will increase after the promotional period ends.

A trusted and experienced Licensed Insolvency Trustee can help you make the best decision for your financial needs.

How to Choose the Right Debt Consolidation Company

When searching for a debt consolidation company consider the following factors:

  • Accreditation: Look for a company accredited by a recognized organization, such as the Canadian Association of Credit Counselling Services (CACCS) or the Better Business Bureau (BBB).
  • Customer Reviews: Investigate customer reviews to gauge the company’s reputation and the quality of its services.
  • Fees: Compare fees across different companies, including origination fees, balance transfer fees, or any ongoing service charges. Seek a company like Blanchard & Co. that offers free consultations.
  • Services Offered: Some companies provide additional services, such as credit counseling, which can be valuable in helping you manage your finances better (and may even be a mandatory course for some).

Be wary of red flags that may indicate a predatory lender or a scam, such as aggressive sales tactics, upfront fees, or guarantees to eliminate debt or repair your credit without assessing your financial situation.  If the company or individual assisting you is not a Licensed Insolvency Trustee, you very well may be talking to a middle person who will take a fee from you and then send you to the Licensed Insolvency Trustee.  It is best to go directly to the professional.

By understanding the pros and cons, exploring the different types of debt consolidation loans, and choosing a reputable company like Blanchard & Company, debt consolidation can prove to be a valuable tool for anyone looking to better manage their debt and improve their financial situation.