You have probably heard about debt consolidation as a financial alternative to bankruptcy. There are some things about debt consolidation that are common knowledge, like negotiating payments on debts and paying one amount rather than several bills a month. Here are four things that you probably didn't know about debt consolidation.
Most debt consolidation companies offer workshops to their clients. These usually consist of an introductory workshop that discusses your options, how the process works, and what you need to know before you get started. Other workshops are available to help you learn to manage your debts, prevent yourself from having the financial problems again, and help you develop a savings and budgeting strategy. The idea of these workshops is to help you get out and stay of debt in the future by teaching you financial skills that you need.
Lower Overall Debt
You may know that debt consolidation will help you lower your monthly payments, but what you may not know is that it also helps lower the overall debt. In some cases, your consolidation representative can have late fees removed and the account frozen. If the account is frozen, you won't be able to use your credit card but you also won't be accruing interest.
Taxes Aren't Covered
If you are gathering your debts for a consolidation meeting, you need to know that any back taxes you owe are not covered. This is something that must be handled by the Canadian Revenue Agency. You will need to contact them and set up a payment arrangement directly. If you are unsure of how to do this, you can discuss the issue with a debt consolidation agent.
They can help you work out a payment schedule and answer questions you have about the process as well as help you approach a revenue agent to set up repayment. The only catch is, the debt consolidation company doesn't make the arrangements for you and the payment is not part of your debt payments.
You will have a form of interest for your consolidation. This will vary greatly depending on the company you use and the type of option you take. For example, if you choose a consolidation loan, you will be paying bank interest on that loan. If you choose straight debt consolidation, your interest will likely be much lower since you are paying on the debt service rather than a debt loan.
These are just a few things you may not know about debt consolidation. If you are in severe debt and looking for relief, contact your debt consolidation company today. Be honest about the debts and your income in order for them to help you.Share