COVID-19 Update: Our team is conducting consultations by phone & video. In-person appointments are also available in select locations. Learn More

Call for a Fresh Financial Start
Call for a Fresh Financial Start

Trusted Debt Consolidation Services in British Columbia

When you owe money to many different creditors, managing monthly payments can be overwhelming, and it’s easy to feel like you may never get ahead. With debt consolidation services from Smythe Insolvency, individuals in British Columbia who owe various creditors can consolidate debt, combining them into one manageable monthly payment to get themselves out of debt. As Licensed Insolvency Trustees, we are committed to finding the best options for dealing with debt. Money problems can happen to anyone. We maintain complete confidentiality with our clients. Insecurity or embarrassment shouldn’t be reasons to keep anyone from obtaining the financial assistance they need. Contact our experienced team at any one of our convenient office locations in British Columbia for a free debt consolidation consultation today.

What is Debt Consolidation and Why Should I Consider It?

Debt consolidation is a manageable debt relief program that provides you a way to pay off debts without juggling multiple payments. By taking out a loan and paying off all of your debts at once, you can focus on just one loan repayment. While it won’t reduce the amount of your debt, you may save money on your debts if the interest rate of the loan is lower than the average interest rate of all your outstanding debts. Consider a consolidation loan to help pay off debts owed to credit card companies, retail stores, public utility companies, unsecured personal loans, or taxes. Combining these debts is advantageous. Everyone’s personal situation will be different, but the advantages include:

  • Reducing the stress of multiple debts
  • Making monthly payments more affordable
  • Possibly reducing interest rates
  • Allowing payoff of debts sooner
  • Minimizing pressure from creditors
  • Improving your credit

The Different Types of Debt Consolidation

Taking out a consolidation loan isn’t the only option to consolidate your debts. Every individual’s financial situation is unique; therefore, not every solution will make sense for every circumstance. Our Licensed Insolvency Trustees will learn about your specific debts and finances to help you decide on the best solutions for consolidating credit. Options other than loans include:

  • Credit card balance transfers: Transferring debt to a credit card designed to offer low rates for transfers can reduce your payments through promotional rates. These cards often offer a 0% rate during a promotional window, giving debtors anywhere from six to eighteen months to make payments with no finance charges. After the promotional window, these cards apply high-interest rates, so this option should only be used for smaller debts that can be paid off within the promotional window.
  • Lines of credit: You can apply for a line of credit at a bank or credit union to pay off debt. This is similar to a credit card in that you can borrow money to pay off debt up to your line of credit. Minimum payments on a line of credit or generally low. The negative side of these loans is that if you only make the minimum payment, you will never get out of debt.
  • Home equity borrowing: Using the equity in your home, you can refinance, take out a second mortgage, or apply for a home equity line of credit to pay off debts. This type of borrowing is attractive to many since, generally, borrowers qualify for a lower interest rate compared to other options.
  • Debt management plans: One option to consolidate debt into a single, manageable monthly payment, that does not involve borrowing, is to set up a debt management plan also known as a consumer proposal. If you don’t qualify with your bank for a consolidation loan or you want to reduce your monthly debt payment as much as possible, filing for a consumer proposal could be a great option for you.

Secured Loans Vs. Unsecured Loans

Loans to pay off debt consolidation come in two forms: secured and unsecured. While both types of loans achieve the same goal of paying off multiple debts and consolidating money owed into one payment, there are differences between the two. The interest charges are generally lower on a secured loan. This is because borrowers offer up an asset that can be used as collateral against a secured loan. If the borrower defaults on a payment to the lender, the lender may sell the asset to pay for the debt. An example of an asset in a secured loan could be real property if a borrower uses a home equity line of credit or refinancing to acquire a loan. If a borrower does not have an asset to offer as collateral, then the consolidation loan is unsecured. Unsecured consolidation loans tend to have higher interest rates due to no asset being available for collateral.

How to Choose the Right Debt Consolidation Service

The ultimate goal for choosing debt consolidation is to provide an opportunity to pay off debt without incurring additional bills or hurting your credit score. As with all of our insolvency services, we work closely with every client to make sure each one makes the best decisions for their financial situation. When deciding what debt consolidation service is right for you, keep these important tips in mind:

  • Borrow from a reputable lender
  • Read contracts closely for any hidden fees or charges
  • Ensure the interest rate works with your budget and is lower than your current debts
  • Make sure the monthly payment fits within your budget
  • Be sure the loan can be paid off in 5 years without taking on additional credit
  • Make sure there’s no penalty for early payoff
  • Check if your credit score will improve if paid off on time

Consolidation Without Borrowing

You might not even be aware that there are options for legal debt consolidation that do not require taking on more debt. Non-borrowing options in British Columbia include:

Filing a Consumer Proposal 

A consumer proposal is a formal offer made to your creditors to repay your debt. In the proposal, you make an offer to your unsecured creditors to repay them, usually settling your debt for less than the full amount you owe and repaying on a schedule that works best for you. After you complete the proposal, your debts are forgiven.

  • This process is an excellent option for individuals who need help repaying debts but have a steady income that allows them to make payments. Ongoing interest charges are automatically stopped under a Consumer Proposal, and if any creditors have begun collection these actions must stop immediately. Your assets cannot be touched.
  • A Consumer Proposal also consolidates all your debts into one monthly payment, but unlike a consolidation loan, you pay back only the portion of your debt that you can afford.
  • Consumer Proposals are a popular solution to deal with unmanageable debts and allow you to avoid personal bankruptcy.
  • A Consumer Proposal must be filed by a Licensed Insolvency Trustee and in most cases are the better option over debt consolidation loans or traditional credit counselling programs.

Debt Settlement Plan 

A Debt Settlement Plan is another non-borrowing option to consolidate certain types of debts. A DSP is typically facilitated by a debt or credit counsellor. They will review your financial situation with you and arrange a full-payment plan with your creditors for your debt that is eligible. They’ll also negotiate an interest freeze, if possible.

  • With a debt settlement plan, you’ll repay 100% of your debt, usually without interest. You’ll also be required to pay the credit counsellors’ fees – even if they are a non-profit organization.
    • Both non-profit and for-profit credit counsellors and agencies will typically charge fees for setting up the plan, monthly administration costs and other service fees.
  • Not all creditors will accept traditional or non-profit credit counselling offers, are not legally obligated to do so.
  • Government debts (CRA debt, student loans) cannot be settled or reduced by a DSP
  • Credit counselling plans require to you repay your debts in full, but the impact to your credit will be the same as filing a Consumer Proposal.

Choose a Licensed Insolvency Trustee

All Licensed Insolvency Trustees at Smythe Insolvency are officers of the court dedicated to ensuring your rights and your creditors’ rights are maintained throughout the debt consolidation process in British Columbia. When you choose to work with us, you can be sure that you’re well represented in all matters related to insolvency. We work directly with your creditors, stop the harassing phone calls, and reduce the amount of financial stress in your life. Contact us to schedule your free debt consolidation consultation today. With over 10 office locations in British Columbia, you’ll find a convenient location near you.

Sign up to receive our newsletter