subject: Canadians Maxed Out On Credit Card Debt [print this page] Now is a bad time for Canadians to realize they're maxed out on unsecured debt. With lenders making aggressive offers and easy-money qualifications, it's no surprise that Canadian households are loaded down with unsecured debt. And when the unexpected happens, hundreds of thousands of people won't be able to keep up with the payments. It's more common than you might imagine. Much more common.
Making matters worse for Canadian borrowers, our federal government has changed the mortgage lending rules. They've shortened the maximum amortization period to 25 years, down from 35 year in the recent past.
The new Canadian mortgage rules will deliver a double whammy to borrowers. First, they'll have to come up with more money to own a home. That means more for a down payment, or a higher monthly mortgage payment.
Second, the new restrictions will probably push home prices down in many markets, reducing people's net worth and chilling their sense of financial well-being. Homeowners and non-homeowners alike will feel the pinch, which is why the Bank of Canada has been calling for Canadians to pay down debt.
But what happens when you can't? A job loss, health issue, separation or divorce, or unexpected expenses can push people over the edge.
That's when they start getting calls from collection agents, as unpaid bills stack up and credit ratings tumble.
Debt Consolidation in Canada
People suffering in these circumstances often look to debt consolidation companies for help. Many may not be aware of the complete range of options available, which is why a call to a credit counselling agency makes sense. A credit counsellor will start by helping you to evaluate your circumstances and support you with unbiased, objective advice. Most credit counsellors offer free and confidential initial consultations. Take advantage by choosing a reputable firm, and be forthright and honest with them.
A good credit counsellor will help you choose a course of action, and when appropriate, offer you ongoing support and guidance, and representation with your creditors.
Credit counsellors may help you to negotiate an agreement with those creditors to obtain a reduction in interest rates and in principle amounts owing, which can save you up to 70% over time. They'll make arrangements to pay back debt under that agreement in an orderly manner, and in a way you can afford.
Moreover, as your support and your agent, a credit counselling firm will stand between you and your creditors, so the collection calls stop.
Bankruptcy
One thing most credit counsellors cannot handle is bankruptcy, which is a severe and complicated action in Canada. In fact, the vast majority of people can resolve their debt without having to resort to bankruptcy.
Consolidation Loans
The other thing a credit counsellor will not do is lend you more money. Credit counsellors are there to get you out of debt, and not simply replace a bunch of smaller debts with one larger debt.
Credit counselling agencies can show you choices, but perhaps more important, a call to a credit counsellor will help you understand that you are not alone, by any means, and that you have options when you need to consolidate debt. Simply knowing that much makes most people feel a lot better, right away.
