It’s sad to see so many Canadians struggling to manage their finances. By the end of this short guide, you’ll know more about debt consolidation than most Canadians.
And when it comes to debt, things become really murky. I’ll answer the questions I hear all the time from 4 Pillars clients including: Debt consolidation involves taking out one big loan to pay off many small loans.
Each one is essentially a contract where you borrow money and then agree to pay it back over a period of time with set payments.
So to combine or consolidate debts, you actually need to get a new, larger loan and then use the money from it to pay off all the smaller loans you wish to consolidate (bring together).
Debt consolidation is a third-party payment system. Agencies range in quality so make sure you shop around. Most debt consolidation plans are structured the same way. They ensure member agencies pass rigorous standards set forth by the Council on Accreditation or another approved third party, and that their counselors pass a comprehensive certification program. Financial institutions don't give preferential treatment to any one organization, nonprofit or otherwise.