An Example of Debt Consolidation

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The definition of a debt consolidation is this:

In order to have a single payment to make, you decide to take a consolidation loan with a bank. This one repays your creditors and you only have to deal with it from now on.


Concrete example of consolidation of debts


Case:  Remi, 32 years old

Credit Card: $ 30,000 to 18%.

Line of credit : $ 5,000 to 9.5%. 

Personal loan : $ 5,000 to 9.5%. 

Total debts to Rémi: $ 40,000 for 38% of indebtedness. 

Current payment: $ 900.00 monthly





1. He must take stock of his debts (add the amounts) and note the interest rates.

2. Put a note next to the debts whose interest rate is higher than 14%.

3. Make an estimate of how much the consolidation loan will be (using an online calculator for this purpose).

4. Rémi will also have to find his debt ratio. If it exceeds 40%, financial institutions may refuse. A financial advisor will help with this step.

5. After determining the maximum amount he can dedicate to the loan, Rémi will try to get his credit file (if there is a mistake, he will want to have it corrected).

6. Then he will go to his banking institution to try to obtain debt consolidation.


If Rémi gets his loan:

  • Its debt ratio will fall to 34%.
  • Its interest rate will then be between 12 and 14%.
  • He will have a payment around $ 668.00 to make rather than $ 900.00.
  • In the end, Remi will save $ 22,000 in interest.


If you want to try to collect all your debts in a single loan, it’s better to do it the right way. Get help from a financial advisor or Insolvency Trustee to assist you in your efforts to give you the best chance of success.


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