What is Credit Counselling?
Consumer debt is a load that bears too much burden to most of the residents in Canada. In fact, Canadians consumer debt accounts for over $27,000. This number coveys the fact that most Canadians are struggling to pay their debts with high-interest rates that are associated with credit card debts, installment loans, and all sorts of consumer debt. Though you are diligently paying the minimum debt payments each month, it will take you longer to pay off your entire debt. Besides, paying more than the minimum amount each month is hard, considering that most individuals are dealing with several debts. Thus, if you are one of these individuals and you haven’t considered any solution to your debt, you will likely end up to file for bankruptcy.
Moreover, if you feel that your debt is inevitable, you might need to take a considerable solution as early as possible before you turn into personal bankruptcy as a resort. You might need to consider the assistance of credit couselling agency to ensure help in managing your finances. With a good credit counselling in place, you can rebuild your finances and get back on track towards financial stability. Also, you can avoid qualifying for the other debt solutions like a consumer proposal or personal bankruptcy that will impact your credit rating severely.
What Will Transpire in Credit Counselling?
Consumer credit counselling is a process that involves a precise education and reduction of debt. It is established to help stagnant individuals who are a prisoner of their consumer debt. Also, it provides broad support in managing your finances. Moreover, consumer credit counselling is usually driven by non-profit organizations. It is the usual preference of individuals who are having a hard time coping up with their debt payments yet can still manage to pay the required minimum each month.
The duration of credit counselling is conceived to be a long process, depending on your debt level. Somehow, it also depends on the capacity of your credit counsellor to deal with your creditors to hold a good negotiation of what you owe from your creditors. Through effective budgeting and financial mentoring, consolidation loans, as well as dealing with your creditors and other efficient tactics, credit counselling can be the most powerful means to free you from indebtedness. It can be the most efficient tool to build a stable financial status and prevent you from getting involved again with any consumer debt.
What You Can Get from Credit Counselling:
- You can get a consultation and deliberation from a skilled financial counsellor on how to develop a budgeting plan.
- You can get help in terms of negotiating to reduce and reverse your late fees with your creditors.
- It aids in securing a debt consolidation loan to lower total interest rates as well as your debt payments each month if deemed relevant to your situation.
- You can obtain a debt management plan that will help you in repaying your debt. By enrolling in a DMP, you won’t worry about missing payments as you’ll only be obligated for a single payment that your agency will spread out and pay to your creditors accordingly.
Is Credit Counselling the Most Feasible Option?
You might be asking: Is credit counselling the best option for me? – Credit Counselling might work as the most feasible or viable option for most Canadians, but it does not follow that it will yield the same result to everyone. For instance, if your debt to income ratio is extremely high, it will imply that you can’t afford to pay even the minimum each month. This case may be considered for a consumer proposal or filing for personal bankruptcy. The bottom line is if you can’t come out debt-free in credit counselling in a maximum of seven years, qualifying for bankruptcy and a consumer proposal might be more feasible for you. Besides, you can also compare credit counselling vs. debt settlement and determine which will serve you best.
Furthermore, if you an enrolled in a credit counselling, you can’t get an affordable credit while currently on a debt management plan. Hence, if it takes you more than 7 years to successfully knock down your debt in credit counselling, bankruptcy and consumer proposals would be more favorable for you as you can only be hindered in getting affordable credit for a maximum of seven years.
However, if you are avoiding the disadvantages of bankruptcy and consumer proposal and you don’t want to take time in credit counselling, a debt settlement might be the debt relief solution that you want to consider. This is because a debt settlement program at its best can potentially free you from indebtedness for approximately 12 to 36 months.
When To Consider Credit Counselling?
On the other hand, if your total debt is around $10,000 or lesser, it is recommended that you consider credit counselling. This is because if your debt is less than $10,000, the duration you spent in paying your debt in credit counselling as compared to the length of time you have with debt settlement is insignificant. This is associated with the fact that reducing your principal is not normally offered by credit counselling agencies; their usual terms are negotiating to lower your interest rates and eliminate your penalties and late fees. This follows that if your maximum debt is beyond $10,000, getting a debt settlement is recommended, as it can save you more money.
More Information on Credit Counselling
Knowing more about Canadian Debt Counselling Services should be your initial step before going over the process. To know more about your options and the process that’s right for you, simply fill out the debt relief form.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.