When you convince creditors to allow you to pay back less than you owe, it is thanks to your art of debt negotiation. Whether you can do it yourself or get help from an experienced and expert debt negotiation agency in Canada, debt negotiation is a burning issue for Canadians, and today, we are going to give you some good insights into the art of debt negotiation.

Logically, lenders who lend you money expect some earnings on their investment through interest rates. So, asking them to forgive some amount of your debt is not a pleasing offer for them. They can take other routes to recover their original money and interest, such as high-pressure collection calls, wage garnishment, and bank account freezes.

Risks Associated with Debt Settlement in Canada:

Every coin has two facets. Therefore, debt settlement in Canada also has some risks associated, such as:

Impact on Credit Scores:

During the debt settlement process, borrowers negotiate with lenders to cut debt, including a portion of the principal amount besides interest. It’s not good in the eyes of credit score deciding agencies in Canada; they leave a mark on it and decrease the credit scores of those lenders with negative remarks.

The remarks remain for seven years in Canada on credit scores and prove the biggest hurdles on the road to obtaining fresh credit from the market, financial institutions, or government agencies.

Impact on Taxes:

Canadian tax laws consider forgiven debt as taxable income. So, be ready to pay those taxes or consult your tax consultant.

You May Invite Legal Action:

Debt negotiation doesn’t mean the lender will not take legal action against you in the future and recover their full amount or total debt from you besides interests on the principal amount.

Cash Requirement:

If you have small to midsize debt, chances are high that lenders may ask to deposit either the remaining amount of debt or a portion of debt immediately after the debt negotiation process and their approval. So, borrowers must have that provision first.

Risks of Working with A Debt Settlement Company:

There are some risks associated with debt settlement companies, and we must be aware of them before hiring them. Those risks are:

You Must Bear Fees:

Profit for service companies, when involved in debt negotiation on your behalf, they charge high fees, and you need to pay them in advance whether they succeed or not.

You Must Bear Penalties & Interests:

Suppose you have started debt negotiation with your lender; it doesn’t mean you can stop paying regular installments and interest during the negotiation period. You should continue paying all until you reach an agreement and a new payment schedule has been agreed between both parties. Otherwise, your lender can report negatively to credit bureaus, hurting your credit scores.

Negotiation Can Take Longer Time:

No debt negotiation company can promise you a deadline for their attempts. It may take longer, and you must pay original installments and interest. Only LIT (Licensed Insolvency Trustee) can provide your protection when they work on your consumer proposal.

What to Do in Debt Negotiations Vancouver in Canada?

Remember the following tips when you go to debt negotiations in Vancouver, Canada.

1. Lower your interest rate.
2. Create a repayment plan.
3. Look into debt forgiveness.
4. Consider debt consolidation loans in Vancouver.
5. Offer a one-time payment.

We are a dependable debt negotiation company in Vancouver/Surrey. We always think in your favor and be true representatives in your debt negotiation process.