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According to a 2019 survey from Statistics Canada, nearly three-quarters of Canadians (73.2%) have some type of debt or used a payday loan in the last 12 months. In this, 31% think that they have too much debt to be paid.
With this, we can say that debt is not a new thing for Canadians as they struggle with it on a daily basis. While some are good at it and handle it appropriately, others need a helping hand. Those who lack the financial knowledge to deal with the debt, look for it from some credible authority.
Among the credible authorities, the federal government stands on top. So, the first question that comes to the minds of debt strugglers is, “does the federal government provide debt relief”? If you too are looking for the answer then know that the federal government does not provide debt relief. However, there are other alternatives available which you can surely take.
This guide will first explain the reasons why the federal government do not provide debt relief and then we will see the alternatives that you can take. So, let’s start with the reasons.
Does the Federal Government Provide Debt Relief?
As mentioned already, the Federal Government does not offer any debt relief or debt consolidation program. So, if you need help with your debt, you will have to look somewhere else.
Although Government does not provide official programs for debt relief, it is connected with different programs that do so. Many of these debt relief programs or services need a license to operate. Where do they get their license from? Obviously, from Federal Government. That means the Government has set a few regulations to keep control of this. These regulations are set in order to contain the fees and improve the structure of these programs.
So, even if the Government does not provide direct debt relief programs, it does monitor the services to make sure the programs are licensed, legal and not scamming the public. Plus, the government sometimes refer people to different credit and debt counselling services. But again, the companies they are referred to are not Government-owned companies. Rather, they work on their own.
Government Approved Debt Programs
This information may have shocked you that the government does not provide a debt relief guide as you may have heard about the government-approved programs in the news or on the internet. Or you might have come across terms like “government of Canada debt relief grants” or “free Canadian government grants to pay off debt”. While these programs look appealing to normal people like you, know that they are not backed by the government.
Any company, individual or program that express itself as government-approved, is often impersonating or simply misleading you. The government does not offer any debt relief nor does it approve or endorse such programs.
When these companies claim to have government backing, they only mean that they have obtained a license and they are offering a consumer proposal. So, the next time you see a government-approved program or service, never think of it as a government-backed or supported program. Companies only use these words to trick you into thinking that they are more official and credible.
So, if there is no single federal government debt relief program, are there any alternatives available? The short answer is yes, there are a few alternatives available which you can take confidently.
What Are Some Alternatives?
If you have a huge debt and that too from different places, debt consolidation is for you. It is extremely difficult to manage all of your debts, especially in different regions. But with debt consolidation, all of your smaller debts are converted into one large debt.
Most times, the interest rate on the debt consolidation is low. Not only this, the processing is low too making it easier for you to pay to only one lender. Debt consolidation has options for both secured and unsecured debt.
If you are stuck in your debt deep, look immediately for a debt settlement. In a debt settlement, you work with a counsellor, who reaches out to your creditors and tries to agree on a middle way – suitable for both of you.
Benefit? This leads to paying less of your debts off, and not the entirety of your debt. However, debt settlement has a few cons as well. As future creditors will know you only pay a portion of your debt, you might get in trouble getting debt again.
Debt Management Or Credit Counselling Programs
If you are not able to qualify for debt consolidation and do not aim to get debt settlement, then get yourself more educated on budgeting and finances. For this, you can take the help of a credit counselling service. A credit counselling service will pair you up with a qualified and experienced credit counsellor. They will sit down with you and educate you on budgeting. While you and your counsellor sit together, they will figure out what option is right for you according to your situation.
There’s a strong chance you’ve heard of bankruptcy and understand that it’s the most drastic of the debt relief choices available to you. Bankruptcy is a legal process that gives financial relief to persons who have exhausted all other options for debt relief. Sure, bankruptcy will wipe all your obligations, but it comes with a slew of negative consequences.
For instance, your credit has been harmed for more than five years. During the bankruptcy procedure, some of your assets, such as jewellery, real estate, and other things, maybe lost, and all credit accounts will be suspended. So, before you consider bankruptcy, make sure you’ve exhausted all other possibilities.
All of these choices will affect your credit report and credit score in different ways and for varying lengths of time, but depending on your position and goals, they are all feasible possibilities for getting out of debt.
The Bottom Line
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