A “Debt Consolidation Loan” from a bank or lending institution, will simplify your life by allowing you to make one payment, but the bank will not let you include all your debts, but only the ones from their institution or ones they can “lien”. They will want to “secure” the loan against your home or property to safeguard the loan. We always advise our clients, NEVER to pledge their assets for unsecured debt. For example, if you have a large credit card bill and approach your bank for a “Consolidation Loan” to combine a few credit cards, and other assorted bills, they normally ask you to sign a “secured” consolidated loan and they will put a lien on your house until it is paid. If you default on these payments they have the right to foreclose on your home. That’s right, take away your home just because you needed help with a credit card bill.
A consumer proposal is similar to a consolidation loan in that you can make one payment, but that’s where it ends. A consolidation loan charges interest and fees and your debts must be paid in full and often doesn’t include all your unsecured debts. A consumer proposal has no interest, can include all your unsecured debt (usually at a reduced amount), allows you five years to pay, and doesn’t risk your family home in the process. Win win in our books.
