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Credit Counselling New Brunswick 2019

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Carrying a certain amount of debt is normal; after all, it’s how most residents of New Brunswick are able to pay for their homes and vehicles. But, carrying an exorbitant amount of debt can prove to be disastrous, leaving consumers in a sad state of financial affairs and potentially leaving them vulnerable to losing all of their valuable assets.

Currently, the average amount of consumer debt in New Brunswick is approximately $22,000. While New Brunswick residents carry a lower amount of consumer debt compared to the rest of Canada, the delinquency rate in this province is one of the highest in the country. Delinquency occurs when consumers miss a number of debt payments, placing them in delinquency status and at risk of losing their assets.

Mounting debt is a growing concern in New Brunswick and in Canada as a whole. As such, it’s critical that Canadians take measures to deal with their debt issues before they spiral completely out of control, and credit counselling can be a viable option to help.

Spring Clean Your FinancesLearn how to spring clean your finances by checking out this infographic.

What is Credit Counselling?

Credit counselling is a process that consumers use when they are struggling to manage their debt. Credit counselling companies typically offer the following services to those who seek debt relief:

Education

The idea behind credit counselling is to offer consumers a number of budgeting strategies that can help them pay down their debt successfully. Through debt management programs, credit counselling can help Canadians who are having trouble climbing out of debt by developing workable budgets that can be comfortably adhered to.

Click here to learn the types of debt you can consolidate using a debt management program.  

Negotiation With Creditors

Credit counsellors will negotiate with creditors on the behalf of consumers in an effort to eliminate late fees, reduce interest rates, and sometimes even reduce monthly payments required to pay down the debt owed.

Reducing Debt

In certain situations where appropriate, credit counselling agencies may also offer services whereby consumers make one monthly payment to the credit counselling agency, after which the payments are divided and paid to creditors in order to reduce overall debt.

Assistance With Debt Consolidation

Agencies can also help consumers consolidate their debt into one debt obligation, usually at a lower interest rate in order to make it easier and more affordable to pay down the debt. The goal of credit counselling is to reduce debt and eventually eliminate it altogether.

How long does credit counselling take? Find out here.

Reasons Why Someone Might Need Credit Counselling

There are plenty of reasons why people seek out credit counselling assistance:

  • Job loss – Losing a job can put a huge financial strain on a family and can make it extremely difficult – if not impossible – to continue meeting debt requirements.
  • Pay cut – The ability to make payments in full every month can be made challenging after income has been reduced.
  • Overspending – Many times consumers find themselves swimming in debt simply because they were not aware of how much they were spending each month relative to their income.
  • Death or illness in the family – Not only can a death or illness impact ongoing household income, it can also place a great deal of emotional strain on a family, making it difficult to manage debt effectively.
  • Divorce – Not only is divorce a stressful event, it is usually an expensive one, placing added financial strain on a household and making it more difficult to continue making debt payments in full and on time each month. 
  • Incessant collection agency phone calls – Those who are already delinquent in payments may be the subject of constant calls from collection agencies who have been hired by creditors to collect on the money owed to them from borrowers.
  • Improve credit scores – While having debt itself isn’t necessarily all bad for a credit score, missing payments as a result of too much debt can certainly have a negative impact. In order to keep scores high or improve them, credit counselling services may be able to help.
  • Avoid bankruptcy – The last resort when it comes to alleviating debt is bankruptcy, but this doesn’t come without its own set of consequences. Many consumers who seek out the assistance of credit counselling agencies do so in an effort to avoid bankruptcy and therefore avoid the ramifications that come with it.

Learn How to Tackle DebtTackle your debt load, once and for all. Click here.

Credit Counselling Vs. Debt Consolidation Loans

In an effort to help alleviate consumers of their mounting debt, various programs are available, including credit counselling and debt consolidation. Many are under the false assumption that both of these concepts are the same, but they are not. In fact, they both offer very different solutions for consumers who are struggling with debt, and one might be a better option than the other based on the individual.

Credit counselling starts with a thorough examination of a person’s debt and involves taking a look at the consumer’s entire financial picture, including debt and income. Instead of repaying debt with one large loan, credit counselling involves helping consumers come up with a sound repayment plan for all outstanding loans. This can involve negotiating for reduced interest rates or the removal of late fees.

On the other hand, debt consolidation involves eliminating all current debt by replacing it with one large loan. Creditors may be open to the idea of having their money repaid in one lump sum and may be willing to accept a settlement to make this happen rather than dealing with potential defaults in payment from the borrower.

Debt consolidation can also help to simplify loan payments since there is only one loan to worry about rather than many. The interest rate associated with debt consolidation loans also tends to be lower, making it more possible to pay down debt faster compared to high-interest debt.

Will a debt consolidation loan look bad on your credit rating? Click here to find out.

It should be noted that debt consolidation is only beneficial for those who have good credit scores and have not yet fallen behind on their payments. Those with poor credit scores may not be able to secure a lower interest rate when consolidating their debt.

Looking for Relief From Your Debt?

If you’re currently struggling with debt and are looking for relief, we can help. We offer a variety of debt relief options for all consumers, regardless of their financial situation. Fill out a form today and be one step closer to tackling your debt

FAQs

Will seeing a credit counsellor affect my credit score?

  • Meeting with a credit counsellor to discuss your credit building or debt relief options will not affect your credit score. But, if you enter into a certain type of debt relief program through your counsellor, that could have negative effect on your credit score.

What is the difference between unsecured and secured debt?

  • Secured debt is backed by collateral in the form of an asset, typically a vehicle or house. Collateral lessens the risk for the lender and sometimes allows a borrower to gain access to a larger loan or a lower interest rate. In the event that a borrower defaults on a secured loan, the lender has the right to seize the assets to recoup any losses. Unsecured debt, on the other hand, does not require any form of collateral or security.

What is insolvency?

  • Insolvency is the state of being unable to repay your debt. A borrower who is insolvent typically must seek professional help to deal with their debt issues.

Does the Canadian Government offer debt relief services?

  • The government of Canada does not offer any specific debt relief programs or products.

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Posted by
Lisa has been working as a freelance writer for more than a decade, creating unique content that helps to educate Canadian consumers. She specializes in personal finance, mortgages, and real estate. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. She enjoys sharing her knowledge and experience in real estate and personal finance with others. In her spare time, Lisa enjoys trying funky new recipes, spendin...

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