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If you’ve ever bought a car, a home, paid for purchases with a credit card, or took out a student loan to pay for your college or university tuition, then you’ve had or continue to have some form of debt. In fact, consumer debt can actually be a good thing for the economy as it helps to strengthen buying power and stimulate the financial industry in Canada.

However, too much consumer debt can place consumers in Nova Scotia and Canadians in general at an increased risk of defaulting on their loan payments, therefore making them vulnerable to losing their most valuable assets. And that’s exactly what many consumers in Nova Scotia are facing today. In fact, total consumer debt is now more than $1.7 trillion across the country.

Consumer Debt in Nova Scotia

The average non-mortgage debt in Canada is approximately $22,125, and that includes credit cards and other forms of lines of credit. The average debt for Nova Scotia residents is $22,229, which is roughly at par with the national average.

That said, many consumers in Nova Scotia are finding it very difficult to make any strides to pay down their debt. While they may be making their payments every month, whatever money they’re putting toward their loans don’t seem to be making much of a difference.

Much of this is because a lot of debt can come with a very high-interest rate, making certain loans much more expensive. Not only that, high-interest debt takes a lot longer to pay down compared to lower-interest debt.

Credit card debt, for instance, tends to be high-interest debt. In fact, it’s not uncommon for interest rates that come with credit cards to be upwards of 20% or more. With rates like these, it can be extremely difficult for Nova Scotia consumers to pay down this type of credit, especially if outstanding amounts owed are high.

Maxing out credit cards and spending up to the credit limit can leave exorbitant loan amounts outstanding, which are then compounded with added interest on top of the principal amounts owed.

To learn how you can consolidate your credit card debt, click here.

Even those in Nova Scotia who make a respectable income and are diligent with their monthly debt payments can still find themselves struggling to climb out of their mounds of debt, failing to reach financial freedom.

The True Cost of BorrowingTake a look at this infographic to learn about the true cost of borrowing.

Credit Counselling in Nova Scotia

You’ve been responsible with your monthly debt payments, but somehow your loan amounts don’t seem to be decreasing much. If that sounds like a situation you’re currently facing, you may find credit counselling helpful.

Credit counselling services in Nova Scotia can help you set up a workable budget that you can comfortably adhere to so that you can better manage your finances and dedicate a certain amount of income to paying down your debt. Your counsellor in Nova Scotia will be able to help you take an in-depth look at your finances and see where certain changes can be made that can help you reach financial freedom sooner rather than later.

These agencies will also speak with your creditors to see if it’s possible to eliminate any late fees you may have been charged. They’ll also negotiate on your behalf to try and reduce the interest rate on your loans. By paying a lower interest rate, you’ll pay less towards interest and more towards your principal, making it easier and faster to pay down your loan.

That said, credit counselling is not for everyone in Nova Scotia. If your outstanding debt is over $10,000 and you are at risk of missing payments, then you might want to look at other debt solutions other than credit counselling, such as debt settlement. In this case, you would work with an agency that would help you to reduce your overall debt load, though this method can have a negative effect on your credit score.

However, if your debt load is under $10,000 and you’re still able to make your payments, then credit counselling might be a viable option for you.

Read this to find out how long credit counselling takes.

Advantages of Working With a Credit Counselling Agency

There are plenty of benefits that come with working with a credit counselling agency in Nova Scotia, if it’s right for you:

Maintaining a good credit score Your credit score is crucial to be able to secure all sorts of loans, so keeping it healthy is essential. By working with a credit counselling service, you can maintain and even build up a good credit score.

Develop a workable repayment plan with your creditors – Credit counselling services negotiate with creditors and establish easier repayment terms on your behalf.

Lower your interest rate – A lower interest rate can reduce your overall debt load, making it easier to repay your outstanding debt.

Consolidate your debt – Managing one loan at a lower interest rate is much easier than having to manage multiple loans at higher rates and credit counselling agencies can help you consolidate all of your debt into one workable loan.

Click here for more information about debt consolidation.

Stop the collection agency calls – It’s not uncommon for creditors to hire collection agencies to harass borrowers in Nova Scotia until all outstanding debt is paid back in full. Credit counselling agencies can work with your creditors so all those collection phone calls can finally stop.

Better manage your finances – Counselling services are important when you need some guidance in budgeting and to gain financial stability.

Frequently Asked Questions

Are all debts covered in a credit counselling program?

No. Credit counselling is generally focused on helping you manage unsecured debts. These include payday loans, credit cards, personal loans, and lines of credit. Secured loans such as home equity lines of credit, car loans, and mortgages are not covered. While in a credit counselling program, you are still expected to make regular payments towards your secured loans.

How can I find a reputable credit counselling service?

There are many misleading credit counselling services out there. To protect yourself, make sure that a service is accredited with a trusted association. Seek out those that are members of the Canadian Association of Credit Counselling Services (CACCS), Credit Counselling Canada (CCC), and the Canadian Association of Independent Credit Counselling Agencies (CAICCA).

How badly does credit counselling affect credit score?

While it will negatively affect your credit, it will be slightly less so than a consumer proposal or bankruptcy. The debts included in a credit counselling plan will get a poor rating of R7 and will last for 2 years. Debts covered under a consumer proposal get the same rating but last for 3 years. Debts under bankruptcy receive the worst rating of R9 and will stay for 7 years the first time or 14 years for the second time.

Get The Help You Deserve

Having an insurmountable amount of debt can be overwhelming and can be very difficult to deal with. If you’re currently struggling with your debt, we can help you get in touch with a credit counsellor in Nova Scotia.

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