Benefits of Invasive Debt Consolidation (Tips For Restructuring with minimal credit impact)

In a perfect world, debt consolidation of any kind wouldn’t be needed. We would all have everything we needed and have healthy bank accounts to go along with them. There wouldn’t be any life events that negatively impact finances, and even if they did occur we would all be adequately prepared for them.  We would be able to go to bed and sleep soundly, knowing that our bank accounts had sufficient cushion.

Unfortunately, the world doesn’t work this way. With sudden job losses, family issues, medical issues, separation, unexpected expenses such as car repairs, home repairs, etc all get in the way of us being financially secure. In a world where so much can go wrong, it is easy to understand why someone would have to invasively consolidate their debt. Many see this is as a negative action but it often provides struggling consumers the chance to actually get ahead of their debt instead of living a life wherein the best case they can afford to make minimum interest payments only, or in a worst-case can’t even afford those.

DEBT PROBLEMS?

Debt can be a symptom of any number of problems and life circumstances. However, it is important to understand that YOU ARE NOT YOUR DEBT.

At 4 Pillars Halifax, we'd love to discuss how we can help you become debt free.


Invasive debt consolidation is any debt consolidation method that impacts credit. These are typically credit counselling, informal proposals, consumer proposals, and bankruptcy.

What are the benefits of invasive debt consolidation?

Freed up cashflow

By far the largest advantage of invasive debt consolidation is its ability to free up a massive amount of cash flow. This, of course, is situationally based but to give you an example, our average client has just shy of $50,000 of unsecured consumer debt. The payment on this would range, on average, between $1,000-$1,500 per month depending on the interest rates and the term of the debt. It isn’t uncommon to see this drop by at least 50% and that is a very high estimate. Our clients are seeing an average payment of $225 per month, post-restructuring. To be fair, the client most likely couldn’t afford the $1000-1500 per month to begin with so a consumer isn’t usually actually ‘saving’ $775-$1,275. But even if it were 1/2 of that amount (which is what we see) a client saves typically ~$350-$650 per month?

Now, what does this allow you to do? With that type of savings you can:

  1. Save a healthy emergency fund within 1-2 years.
  2. Within 5 years have $21,000-$39,000 saved towards a down payment for a home.
  3. Get debt-free faster!
  4. Do the things you actually want to in life.
  5. And the list could go on and on.

I need to reiterate that these are averages. This means that some people pay less, and some people pay more. Some people free up more cash flow and others free up less cashflow.

Reducing how long it takes you to pay your debt off

Take a look at your credit card statement. Usually, on the right-hand side of the statement you will see a line that says how long it will take you to pay off the account if you only make the minimum payment. This number is usually shocking. It isn’t uncommon to see 20-30 years, depending on interest rates, minimum payment requirements, etc.

All invasive debt consolidation plans will see your unsecured debt paid off in 5 years or less. Comparing that to a credit card which, when paying minimum payments only, can take 20+ years it is easy to see the advantage.

Mental Health Benefits

If you’ve felt the mental stress and sometimes even physical pressure in relation to your debt you know how hard it is to be in deep debt. Consolidating your debt is the best way to reduce this stress. I cannot express the number of times I have personally witnessed an extremely positive change in someone’s mental health and attitude as they journey through their debt restructuring process with us.

This has occurred too many times now for it to be a coincidence (Several hundred times at this point). A client’s first appointment is extremely negative ‘I feel like i’ll never get out of debt’, ‘I only work to pay bills’, ‘I feel like a failure because I can’t give me kids what they deserve’, ‘I try so hard to be good at money but bad things keep happening to me’, and the list goes on and on. When you compare that to their aftercare appointments it is usually filled with confidence and an extremely positive attitude towards their money and more importantly, their life.

I have seen multiple business owners experience a downturn in business – when looking at when the declines began it usually begins with when their debt started to accumulate. Interestingly enough, once their debt is taken care of their revenues typically begin to increase again (And at a very fast rate, I might add).

Funny how much our mental health is impacted negatively by debt and how we can turn that around to be a positive impact.

A True Reset

This one is kind of a combination of all of the above. Depending on your personal situation, invasive debt consolidation can truly result in a ‘Reset’. You may have experienced a series of unfortunate events that caused your debt, you may have gone through separation, medical issues, poor money management, etc none of it matters. It may change the solution you choose and the way it is structured but it doesn’t change that a solution is available to you and that you can obtain the relief you need.

Tips for restructuring with minimal credit impact

In all honesty – the truth of the matter is that invasively restructuring debt will nearly always cause a credit impact. What is important to understand is that the benefits to restructuring (listed above) FAR outweigh the fact that your credit will be impacted. Understanding why is an article for another day but for now if you are struggling with debt but are unsure about the true impact on your case, please reach out.

Regardless of that, here are a few tips to ensure that you minimally impact your credit:

1. Work with a company that has a proper credit rebuilding program. Credit rebuilding is something that takes more than a couple of sessions. For example, we offer a minimum of a 12-month credit rebuilding program that is delivered via online training as well as in-person appointments and is customized to every client’s situation and goals.

2. Make sure you explore ALL invasive debt consolidation options. We’ve written extensively on all of them: Consumer Proposal, Bankruptcy, Credit Counselling, and Debt Settlement or Informal Settlement. It is impossible to make an educated decision when you don’t know every option!

3. Get the help you need as soon as you know you need it. Going years with frequent missed payments will certainly look worse to creditors in the future than an isolated incident.

As always if you are considering debt consolidation please reach out to us. The last thing we want is for you anyone to struggle with debt.

Debt Relief SpecialistThis article was written by David Moffatt. A Senior Debt Relief Specialist with 4 Pillars Halifax. 4 Pillars has assisted in creating plans that have helped save Canadians over $1 Billion dollars of consumer and tax debt since 2002. We believe that no consumer should have to struggle with the stress of overwhelming debt. Our debt restructuring strategies can help you cut your debt by up to 80% with less than 3% of our clients ever getting into deep financial difficulties again.

We are proud members of the Canadian Debtors Association. We work for you, not your creditors.

If you are struggling with debt please reach out. It hurts to continue to suffer financially. 4 Pillars Halifax services Halifax, Dartmouth, Bedford, Sackville and the entirety of HRM.