Debt Consolidation As A Freelancer

Law Blog

Freelancing can be a rewarding and challenging career, but it can also be filled with pitfalls you might not think of. For example, if you are drowning debt, it can definitely be much harder to settle that debt with a creditor than if you had a brick-and-mortar job. However, it is possible to get a debt consolidation loan as a freelancer if you are prepared to work for it.

Consolidate All Credit Cards into a Low-Interest Card

The first step you can take is to consolidate all your existing credit cards into your lowest interest one. This will help only if you still have good credit and are able to get a low-interest card from your bank. You could also opt to apply for a secured credit card with your bank, or with the bank with the best interest rates, and transfer your amounts from the other cards over a bit at a time. This may take longer, but you will pay back less in interest and more to the principal.

Debt Consolidation Loan Through Your Bank

This is where it gets a bit tricky for a freelancer. To get a loan from a bank or credit union, you need to provide some form of income statement to prove you are able to pay this loan back. This isn't always possible for a freelancer, as many creditors and banks don't consider freelancing a viable or steady income.

If you own the majority of your house, you could opt for a reverse mortgage for the amount you owe. You could also try to negotiate a lower amount with your creditor and use any existing assets such as a cottage, house, RRSP or other fund you may have to secure the loan. You may also need a co-signer -- one who has a job with a weekly paycheque.

Proof of Income

Since as a freelancer, you don't have an employer with whom you receive a T4 or pay-stubs from, you could contract your clients and ask them for proof of income from them. This could be in the form of a letter, simply stating that yes, you have worked for this company and for how long. You could also print any online payment statements from whichever payment processing company you use. These are usually very detailed and will have the name of the client's business as well as the amounts paid. It's a good idea to have at least a year's worth of information to give to your bank or credit union to secure the loan.

Consolidation Loan Online

It is possible to obtain a debt consolidation loan online from a reputable lender. Check out each lender first with the Better Business Bureau, look for complaints, and check for reviews from reputable sites. Make sure the lender can do business in your province and get everything in writing first. Stay away from those that guarantee a loan regardless of your credit score, and never pay any upfront fees.

If you're struggling to consolidate your debt as a freelancer, a credit counselor, like those at David Reynolds & Associates, may be able to offer more advice specific to your situation.


10 August 2015

File Chapter 7, and Keep Your Home

Many people assume that when they file Chapter 7 bankruptcy, they will have to give up their homes and other property. This is not necessarily the case. I am a bankruptcy attorney, and I have helped many clients file for Chapter 7 bankruptcy without giving up homes, cars, and other property. When you file for bankruptcy, the property you are allowed to keep depends on your individual circumstances and the state where you live. Most states allow exemption for property you are currently paying for. This blog will guide you through that information and help you determine if filing Chapter 7 bankruptcy is the right choice for you.