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How to consolidate debt in Calgary
Consolidate your debt by getting a new loan or negotiating for better terms.
Consolidating your debt can help you pay it off faster and with lower interest rates. We break down the most popular types of debt consolidation in Calgary, including consolidation loans, balance transfer credit cards, debt settlement services and debt management programs. Find out more about which option might be the best fit for you.
Your options: Summary of debt consolidation in Calgary, Alberta
| Debt consolidation option | What is it | Who is it suited for | |
|---|---|---|---|
| Unsecured debt consolidation loan |
| Best for people with good to excellent credit with no asset for collateral | Compare loans Learn more |
| Secured debt consolidation loan |
| Best for people with good or bad credit who own a valuable asset | Compare loans Learn more |
| Balance transfer credit card |
| Best for people dealing exclusively with credit card debt | Compare cards Learn more |
| Orderly Payment of Debts (OPD) |
| Best for people looking for a low fixed interest rate. | Learn more |
| Debt management program |
| Best for people who have the money to repay their debts, but want to reduce their monthly payments or interest rates. | Learn more |
| Debt settlement |
| Best for people who can’t afford their debt, don’t qualify for financing and want to stop punitive action by creditors. | Learn more |
| Consumer proposal |
| Best for people with bad credit who don’t qualify for financing and want to stop punitive action by creditors. | Learn more |
1. Compare unsecured debt consolidation loans in Calgary
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Features of unsecured debt consolidation loans
- How to apply. Compare rates and apply for pre-approval with several lenders. When you decide on the lender you want to go with, fill out a formal application online. Submit the required documents and wait for a loan decision.
- How much it costs. You could pay as low as 9.75% in interest if you have excellent credit and as high as 47% with bad credit. You may also be on the hook for origination fees, prepayment fees, late fees and NSF fees, depending on the lender.
- Pros. It’s an easy application with no need for collateral. You can use the funds to pay off any kind of debt.
- Cons. It comes with higher interest rates than secured loans. It’s difficult to qualify if you have bad credit. You could hurt your credit score if you default.
Best debt consolidation loans in Canada
2. Compare secured debt consolidation loans in Calgary
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Features of secured debt consolidation loans
- How to apply. Compare rates and apply for pre-approval with several lenders. Fill out an application with the lender of your choice. Provide documentation to prove the value of the asset you want to use as collateral. Wait for a loan decision.
- How much it costs. These loans usually start at the prime rate for excellent credit, which is currently 6.99%. Your rates will be higher with bad credit. You could also owe origination fees, prepayment penalties, late fees and NSF fees, depending on the lender.
- Pros. It comes with lower interest rates than unsecured loans. You could qualify for higher amounts. There’s a better chance of approval if you have bad credit.
- Cons. There’s a chance of losing your asset if you default. The amount you get approved for is often tied to the equity in your asset.
3. Compare balance transfer credit cards in Calgary
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Features of balance transfer credit cards
- How to apply. Compare balance transfer credit cards to find the best deal. Fill out an application for the card you choose, and wait for approval. Your card should come in the mail a few days later, and you can then transfer your balances from other cards.
- How much it costs. The promotional rate is usually between 0% and 3.5%. Once the promo ends after six to eight months, rates increase to between 8.99% and 19.99%. You may have to pay balance transfer fees of 1–3% on the amount transferred.
- Pros. It comes with very low interest rates in the first few months. Many cards come with no annual fee.
- Cons. You could pay high balance transfer fees. There are no same-bank transfers. Your rates will increase after the promo offer expires.
Balance transfer credit cards guide
4. Orderly Payment of Debts
- How to apply. Book a free financial assessment with Money Mentors – a firm that specializes in Orderly Payment of Debts (OPD). Speak to a credit counsellor to determine if the OPD program is the right fit for you.
- How much it costs. In addition to the interest rate, you may be charged a fee to administer the program.
- Pros. It comes with only 5% interest and no start-up fees. An OPD arrangement can stop punitive action from creditors.
- Cons. It can hurt your credit score for up to two years and is not suitable for consolidating secured debts.
What is Money Mentors?
Money Mentors is a non-profit credit counselling organization that’s the exclusive provider of the Orderly Payment of Debts (OPD) program on behalf of the government of Alberta. It offers free credit counselling, financial assessment services, budgeting workshops and money coaching.
It doesn’t charge fees to customers since the majority of its funding comes from a mandatory fee charged to creditors.
5. Debt management program
- How to apply. Book a free consultation with a non-profit credit counselling organization or a for-profit firm for a fee. Meet with an agent to discuss your finances and decide if a debt management program is the right option for you.
- How much it costs. The service is free with a non-profit credit counselling organization, but you may pay for lawyers or other services along the way. You’ll typically pay a set-up fee and a monthly maintenance fee with a for-profit firm.
- Pros. It helps to lower your monthly payments and interest rates. There’s no need to apply for financing. It does less damage to your credit score than debt settlement and stops punitive action by creditors.
- Cons. You may have to pay fees with for-profit firms. It doesn’t usually cover secured debts like mortgages or auto loans. You’ll need to close any credit cards you include in your debt management plan.
Sample of organizations that help with debt management programs
| Name | How it works | Location in Calgary |
|---|---|---|
| Debt.ca |
| Apply online |
| Credit Counselling Society |
| Online appointments only |
| Money Mentors |
| You’ll be matched with a credit counsellor for an online or in-person appointment. |
6. Debt settlement
- How to apply. Book a free consultation with a credit counsellor or licensed for-profit debt settlement firm. If you sign up, an expert will work with your creditors to help reduce your debt.
- How much it costs. Consultations are free but you’ll often pay thousands of dollars in fees to set up your debt agreement, depending on how much you owe.
- Pros. It can stop punitive action by creditors (including lawsuits) and can help you avoid bankruptcy.
- Cons. You could pay high fees, and debt settlement will negatively impact your credit score. Creditors can refuse to settle your debts. There could also be tax implications.
Sample of organizations that help with debt settlement in Calgary
| Name | Overview | Location in Calgary |
|---|---|---|
| Debt.ca |
| Apply online |
| Credit Counselling Society |
| Online appointments only |
7. Consumer proposal
- How to apply. Book a free consultation with a licensed insolvency trustee. Meet with an agent to discuss your finances and decide if a consumer proposal is the right option for you. An expert will then work with your creditors to help reduce your debt.
- How much it costs. Consultations are free, but you may pay thousands of dollars in fees to set up a consumer proposal, depending on how much you owe.
- Pros. It can reduce your overall loan amount, extend your payment period and stop interest charges. It can also stop punitive action by creditors.
- Cons. Stays on your credit report for up to three years after you finish payment, and you may have to pay high fees. It can also significantly lower your credit score and doesn’t cover secured debts.
Sample of companies that help with consumer proposals
| Company | Overview | Location in Calgary |
|---|---|---|
| Bromwich+Smith |
| 800 5 Ave SW Suite 800, Calgary, AB T2P 3T6 |
| BNA Debt Solutions Calgary |
| 703 64 Ave SE #150, Calgary, AB T2H 2C3 |
How to get the right debt consolidation in Calgary
Think about these factors when choosing the best debt consolidation in Calgary for your situation:
- Type of debt. A balance transfer card might be the best option for credit card debt. For combined debts, you might want to go with a secured/unsecured loan. You can also consider a debt management or settlement plan if you don’t qualify for financing.
- Amount you owe. For smaller amounts, think about financing or a debt management plan. For larger amounts, you may want to consider a consumer proposal or some other type of debt settlement.
- What you can afford. Aim for financing or a debt management plan if you’re able to make your payments on time. You may want to think about debt settlement or a consumer proposal if you need a lower monthly payment.
- Available assets. Consider a secured loan to get lower interest rates if you have an asset to secure your payments, such as your car or house. Just be aware that your asset can be repossessed if you default on your payments.
- Fees. You’ll end up paying fees (or interest rates) with most forms of debt consolidation in Calgary. To avoid paying too much, your best option is to ask about fees ahead of time to get the best rate or go with a non-profit credit counselling service.
- Credit score. You may have issues qualifying for financing with a low credit score. Some types of debt consolidation in Calgary can also severely damage your credit. Avoid debt settlement and consumer proposals if you need to maintain a good credit score.
Calgary personal finances at a glance
Between credit cards, lines of credit and other loans (excluding mortgages), Albertans have the highest rate of debt among all provinces in Canada.
Debt in Calgary
According to Equifax, the average non-mortgage debt for Calgary residents in the second quarter of 2022 was $24,987. This is compared to Edmonton residents, who carried a slightly lower debt of $24,259. The average level of debt for people across Canada was $20,744.
Income in Calgary
According to Statistics Canada, the average income in Calgary was $44,800 in 2020. This is on par with the provincial average of $44,800, and slightly lower than the average income in Edmonton ($45,600). These figures include all types of income, such as employment, rental, investment, retirement and government benefits.
Frequently asked questions
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