Consolidating your debts is a good solution to consider if you’re having problems with your finances. But be careful: choosing to consolidate your debts doesn’t come without risk, so it’s important to exercise caution before committing to a particular financial institution. What kind of risks? BLT Lapointe & Associates Inc., licensed insolvency trustees in Montreal and Laval, is here to answer all of your questions regarding your financial options.
Risks of consolidating your debt
Debt consolidation is the act of procuring a loan from a financial institution so that you can pay off all of your creditors at one convenient monthly rate. This solution can simplify the management of your finances and allow you to regain and maintain a good credit rating. While it’s a great idea, it doesn’t come without certain risks.
- High interest rates. Many financial institutions are extremely strict when it comes to setting interest rates for clients who choose to consolidate their debt. Unfortunately, many people find themselves paying much higher interest rates than they would have had they continued to reimburse their creditors directly. Don’t sign any documents without carefully reading and understanding the terms beforehand. Be sure to check the applicable interest rate and all the conditions that come with the loan.
- Increased debt. If you don’t change your spending habits and you continue to use your credit card frivolously, your debt could become even larger than it was before. For it to be an effective solution, debt consolidation requires rigorous financial discipline.
- Inability to postpone payment. Financial institutions generally apply harsher penalties than other creditors. In case of difficulty, they might reject a request to let you defer payments to a later date. Something to consider before you choose this option!
Is debt consolidation the right solution for you?
To find out if debt consolidation is the right solution to solve your problems with debt once and for all, we suggest you take the time to talk to a specialist.
At BLT Lapointe & Associates Inc., our team of qualified financial advisors in Montreal and Laval and on the South Shore and North Shore will carefully evaluate your current financial situation and let you know if debt consolidation is the best solution for you. The first visit is free and without obligation: call us today.