All across Canada, individuals struggle with debt from time to time. 2017 was a big year for home prices in Ontario, and that has had a significant impact on the debt of individuals living in the province (higher prices means more debt must be taken on in order to own a house). While this news was great for homeowners that are looking to sell, it makes things more difficult for those looking to buy a home and can cause them to take on more debt than they can realistically afford.
Despite this rise in home prices, debt payment delinquencies in Ontario have actually dropped 6%, which means people are getting better at making payments on their debts. However, just because the average person is doing better when it comes to paying their debts, that doesn’t mean there aren’t people out there struggling. Sure, some people prefer to tackle their debt on their own and don’t want help, but others embrace assistance and want to do whatever they can to get out of debt (and stay out of it) fast.
One of the most common ways for getting out of debt is to use the assistance of a credit counselling service. This article will tell you all you need to know about credit counselling in Ontario, so you can determine whether it is right for you.
What is Credit Counselling?
Credit counselling is a process and service that is primarily used to help individuals get out of debt. They do this mainly through financial education, effective budgeting, and other tools to help not only get people out of debt but keep them out of debt. These counsellors can also negotiate with your creditors on your behalf to resolve debt in other ways if that’s what you decide you want to do.
Normally, credit counselling is done through credit counselling agencies and there are likely a few in your city or town. If you live in a place like Toronto or Ottawa, there are many to choose from. A little later in this article, we will cover how to choose which agency to work with. So, now that you know about the purpose of credit counselling, how does it work and what should you expect from it?
Learn how to spring clean your finances, click here.
How Does Credit Counselling Work and What to Expect?
The way in which credit counselling works is fairly straightforward. First, you need to choose which credit counselling agency to go with, which will be covered later in the article. Once you’ve chosen an agency, you will have an initial meeting with a credit counsellor. Since it’s this counsellor’s job to help you come up with a plan to eliminate your debts, they need to know about your life and finances. While you could just explain it to them, it is often easier to write or print it all out. You should tell them your income, how much debt you have, your assets, your financial goals, and things like that. These elements will help them to get a snapshot of your life and finances, to better determine what steps to take next.
From then on, they will work with you to create a plan, educate you about better financial practices, and tell you how to deal with debt. Throughout your implementation of the plan, you will remain in contact with them to make sure things are going well. They should be able to answer any questions you might have.
How long does credit counselling usually take? Find out here.
What to Expect
The main thing is that you should always feel confident in the fact that these counsellors will respect your privacy and remain objective throughout the process. You will not have to worry about them sharing details of your situation with anyone else. They will always do what’s right for you and your financial health.
Also, you need to be aware that these people aren’t miracle workers. Sure, they have great tips and a lot of educational tools to share with you. However, you still need to make an effort to follow their plan and remain dedicated to the cause. They can set the groundwork and give you all the tools to succeed, but ultimately, you need to do the real work to turn their plan into a reality.
Click here to see how you should handle your first credit counselling session.
How Do You Know When You Need Credit Counselling?
There are tons of reasons why people might decide to visit a credit counselling service for assistance. Some may be really struggling with credit card debt, others might have a car loan that they can’t afford. Many just want to learn about various areas of finance, so they can help themselves in the future and avoid ever getting into major debt trouble.
Is your car loan adding up to more than your car is worth? Try reading this.
How you know when and if you need counselling will come down to your own personal preferences and goals. Some people are completely fine clawing away at their debts on by themselves over time, while others have more immediate goals and want to get assistance right away.
Generally, if you feel that you alone aren’t able to deal with your debt anymore and you are in way over your head, it can be beneficial to reach out to a credit counsellor, if only to learn more about the services.
Still trying to decide if you need credit counselling? Read this.
How To Choose a Credit Counselling Agency?
If you are in a large city (of which Ontario has many), you likely have several choices for credit counselling services. As you could imagine, having so many choices can make it tough to choose which to go with. The first thing you should look at is the reputation and the reviews of an agency. You want to look online and also speak to friends and family to see what sort of information you can find about the agency. If they have bad reviews or you have heard bad things, you should steer clear of them.
Another thing to definitely consider is the price. Sure, there are some no-fee credit counselling services out there, but most of them will charge you for their guidance and service. If you are looking for credit help, it may likely mean that you are in debt, so you don’t want to spend more than you have to.
Do you know what the true cost of borrowing is? Find out here.
What Are the Alternatives to Credit Counselling?
Before you move forward, you need to realize that there are a few alternatives to credit counselling that can also help you get out of debt quickly. Two of the most popular of these options are debt consolidation and debt settlement. Debt consolidation is when a person takes out one large loan to pay off many others. This can help make your debt easier to manage, as you will only have to pay off one debt, instead of multiple ones. You might even be able to get a lower interest rate when you consolidate.
Debt settlement is when you and your creditor agree on a reduced balance that you will pay, instead of paying your debts in full. Sometimes, reaching an agreement on terms for a settlement can be tough, but if you are able to, you can save some money. The person you meet with at the counselling agency should be willing to go over other options with you. The option you choose together will be based on your goals, needs and wants.
Need Help Finding The Right Credit Counsellor?
There are many options for credit counselling in Ontario. Hopefully, this article has shed some light on the process and what to expect when you enroll in credit counselling. It can be a lifesaver for those who struggle with budgeting or can’t seem to get a handle on their debt. If you’re interested in working with a credit counsellor or simply want more information, Loans Canada can help.