If you find yourself in a position wherein you are unable to pay the money you owe to your creditors, you have to look out for debt solutions. Debt reduction is one of the ways you can get yourself out of this problem. In today's internet age, it has become quite easy to find companies offering debt solution services. They offer you various debt reduction solutions and advice. You can also look for professional credit counselling services in Toronto.
Image Source: Google
Debt reduction involves replacing part or all of your debt payments with a single, one-time payment. Usually paying a single payment is easier to manage than having to deal with multiple debts separately.
There are various ways of debt reduction or debt consolidation:
This is a very common route used by many to get rid of debts. You can avail of unsecured loans and use that amount to pay off your immediate, short-term, and long-term debts and creditors. The advantage of this method is you pay off your dues on time and thereby don't have to pay any interest for delayed payment, which otherwise would have been the case.
This refers to a mortgage loan. A mortgage loan is secured by your property. This can be a good option if you have equity in your home or a property that is enough to cover your debts. This is because these loans carry a lower interest rate than interest on a personal loan. However, you still will be required to pay processing fees to the concerned bank.
If you can afford neither an unsecured loan nor you have equity in a property to avail a mortgage loan, a debt agreement may be the best option for you. It is nothing but a formal agreement between you and your creditors, made through an administrator. The agreement states the conditions and limitations regarding the payment of dues to your creditors.