4 Pillars Explains The Difference Between Debt Restructuring And Debt Consolidation

In Victoria, as well as across Canada, consumers have different options to consider to address challenges with debt. Not all of the options are right for all situations, which is why working with a debt consultant from 4 Pillars provides the specific insight and recommendations based on the unique situation.

When people in Victoria research information on debt relief options online, they can easily confuse terms and language used on websites, blogs, and articles. To make things more complicated, options are different for consumers in Canada and those in other countries.

Two of the most commonly confused terms in debt solutions are debt restructuring and debt consolidation. A 4 Pillars professional is instrumental in determining if one or both options are right for the consumer and ensuring complete understanding in the process.

Debt Consolidation

Debt consolidation includes taking out a larger, low-interest loan from a bank or financial institute to pay off all unsecured debt in a lump sum. The consumer then repays a single loan payment each month, reducing multiple payments to one, lower-interest payment.

Debt Restructuring

After reviewing the financial records, a 4 Pillars debt consultant may suggest a debt restructuring plan. This can include a formal Consumer Proposal, which is adminsitered by a Licensed Insolvency Trustee. This creates a legally binding agreement to pay back some amount of the debt over a period of time of up to five years.

Determining the best option starts with a discussion with a debt consultant. This provides a clear picture of your financial position and your debt management options.