TORONTO, ONTARIO--(Marketwire -01/04/12)- It's the New Year and the post-holiday credit card bills are starting to come in. If you are feeling financially stressed as a result of overindulgent giving, here are some tips for using debt consolidation as part of a smart debt management plan for a fresh start this new year.
Make a declutter list - List the creditors to which you owe money, how much and at what interest rate. The debt consolidation process begins by prioritizing each obligation according to the highest rate.
Clean up credit card debt - If you have several cards, the next step in debt consolidation is to combine the balances onto the card with the lowest rate. Or you could possibly pay off your cards with a loan and have only one monthly payment at a lower rate. The key to successful debt consolidation is not adding more debt on the credit cards you have consolidated. Going forward, pay for purchases with cash when possible so it's easier to track spending and consider getting rid of extra cards so that you have only one card that you keep at a zero balance.
Organize other debts - As part of your debt management plan, look at the other debts on your list and consider ways to reduce them. For example, can you refinance your mortgage? Pay down a student, car or home improvement loan? If you don't have sufficient funds right now to implement your debt management plan, start tracking your spending to see where you can find some cash.
If you simply cannot meet your debt obligations, a consumer proposal might be a solution. A consumer proposal can help you with debt consolidation by negotiating a repayment plan with your creditors. Payments are made through a trustee or proposal administrator who will redistribute a portion of your monthly payments to each of the creditors.
There are several key benefits to choosing a consumer proposal to pay off your debt:
-- You can negotiate with creditors to only pay a part of your debt instead
of the full amount you owe
-- Interest charges are stopped
-- You will be debt free in five years or less (the repayment plan cannot
be longer than five years)
-- A consumer proposal is legally binding so harassing calls from creditors
and wage garnishments will stop
-- Consumer proposals include many types of unsecured debt
-- You will be able to keep your assets (car, home, etc.)
-- No additional fees are required beyond your agreed-upon monthly payment
As a last resort, bankruptcy is an option to help you get a fresh start if debt consolidation or a consumer proposal are not options. To learn more about filing for bankruptcy, contact your local trustee in bankruptcy, such as BDO for more information.
If holiday spending has left you in a financial bind, there's no need to panic. Simply begin a debt management plan with debt consolidation as your first move. You may find that debt consolidation is your easiest and most effective answer to holiday overspending. However, if you think you need more help in the form of a consumer proposal or even bankruptcy filing, don't hesitate to contact your local BDO http://www.bdobankruptcy.ca for help.
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