📅 Last Updated: July 22, 2022
✏️ Written By Lisa Rennie
🕵️ Fact-Checked by Caitlin Wood

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 New Brunswick 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 in New Brunswick?

In New Brunswick, credit counselling is a process that consumers use when they are struggling to manage their debt. Credit counselling companies in New Brunswick 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 New Brunswick consumers 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 New Brunswick

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 in New Brunswick

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 New Brunswick 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, but 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, but 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 in New Brunswick 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 in New Brunswick 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 in New Brunswick 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 in New Brunswick 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.

Frequently Asked Questions

Which types of debt are covered by credit counselling?

Generally speaking, credit counselling covers any type of debt that isn’t secured by collateral (unsecured) and isn’t debt to the government. This means taxes, student debts, mortgages and car loans are ineligible and must still be paid as normal. Credit counselling is beneficial for repaying credit cards, payday loans, lines of credit and personal loans.

Will I still get collections calls while in a credit counselling program?

It’s possible, but it won’t typically be the case so long as you honour your end of the credit counselling agreement. Creditors are only prohibited from contacting those in consumer proposals or bankruptcy. The rule does not apply to a mutually voluntary program like credit counselling.

What is the difference between credit counselling and a consumer proposal?

They may seem similar, but there are key differences. Unlike credit counselling, consumer proposals are a legally binding agreement between you and your creditors. This makes it a much bigger commitment. That said, you do benefit from being able to negotiate your total amount owed down to a fraction. Credit counselling can only negotiate the interest paid on the overall amount and the time to repay. However, keep in mind that a consumer proposal will affect your credit history a little more than credit counselling.

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 in New Brunswick for all consumers, regardless of their financial situation. Fill out a form today and be one step closer to tackling your debt.

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