By: Kyle Harris BA. LLB. CIRP, Licensed Insolvency Trustee
People often wonder, how can I consolidate my debt so I don’t pay such high interest. There are a few ways to accomplish this.
Option 1: Debt Consolidation
The first option for a person to consolidate their debt, and the option that most people think of initially is a consolidation loan or a line of credit. This is basically taking all your debt (Credit Cards, Pay day Loans, etc.) and putting them all under one umbrella while continuing to pay 100% of the debt plus interest. This option is generally only available to people who have good credit scores and still costs significant interest.
Option 2: Consumer Proposal
The other option and the one that a Licensed Insolvency Trustee can help you with is a consumer proposal. In a consumer proposal, the Trustee takes all of your debts, combines them, and makes an offer to your creditors to pay off a percentage of the total debt. The offer can range between 20% of the total debt to 35% of the total debt depending on the creditors. The proposal is generally paid in monthly instalments for a period of up to a maximum of 60 months (5 years). Once the proposal is paid off, the balance of the debt is gone forever and the creditors can never collect on this debt.