Whether you’re single or providing for a family, debt and the issues that come along with it are never fun or easy to deal with. Sometimes accepting help is the first step you need to take in order to get your finances back on track.
While there are many debt relief options available, speaking to a credit counsellor is a great first step.
A credit counsellor is a trained professional who provides credit counselling services to Canadians facing difficulties with their debt. In Canada, there are non-profit credit counselling agencies and for-profit companies. Depending on the one you choose, the fees can vary greatly.
The first part of the credit counselling process begins with an evaluation of your situation and an assessment of appropriate options for relief. More specifically, your counsellor will look at all your debts, credit, finances, and budget to see where you stand financially.
If you have the financial means to repay what you owe but need some guidance, your credit counsellor will help you get started in a debt repayment plan, which involves paying back your debts efficiently. Otherwise, there are other options available that may help you deal with your debts.
The debt solutions you may wish to explore include the following:
Each solution has its pros and cons, which you should weigh before choosing the solution that suits you best.
If you’re struggling to manage your debt, it may be worthwhile to speak to a credit counsellor. You may learn something new that can help you get your finances on track.
Credit counsellors can introduce you to a variety of debt relief solutions, ranging from simple debt management assistance to more aggressive solutions like bankruptcy and everything in between.
If you’re still able to scrounge together enough money to meet your bill due dates but are finding it difficult, this is the best time to reach out to a credit counsellor before things get out of hand. Perhaps they can offer a solution that can help you avoid taking more significant steps.
Credit counsellors may be right for you if you:
There are many credit counselling agencies in Canada, but how do you choose one to work with?
There are a few key factors to look at before deciding on an agency, including the following:
Look into the credit counselling agency’s reputation to ensure they’re maintaining certain standards of practice in the industry. They should also be licensed in the province they operate in. You don’t want to deal with any agency that has a reputation for false advertising or late payments to creditors.
In Canada, there are non-profit credit counselling agencies and for-profit companies. Depending on the one you choose, the fees can vary greatly. Be sure to ask your agency if there are any fees for the first consultation and what kind of support they offer.
Of course, do note, that depending on the debt relief option you choose, there are certain mandatory filing costs. For instance, a consumer proposal costs $1,500 to file, after which you’ll be required to make repayments to handle your debt. And first-time bankruptcy filing fees are around $1,800, with additional costs if you earn surplus income.
However, these costs are not charged by the credit counsellor and instead are paid to your Licensed Insolvency Trustee where applicable.
In addition to being properly licensed in the province they provide services, the credit counselling agency should not have a laundry list of complaints, which you can find through the Better Business Bureau (BBB) or l’Office de la protection du consommateur in Quebec.
You should also find out what qualifications the specific counsellor has, such as their education, specialized training, and years of experience.
No credit counselling agency should ever coerce you into using their services. You should also gauge the counsellor’s judgment. If you feel uncomfortable with the aggressive nature of a company, request a new counsellor or walk away altogether.
Credit counsellors offer several benefits, including the following:
Credit counsellors are trained professionals who are skilled in helping consumers get a handle on their finances. They can provide an unbiased opinion of your debt situation and suggest potential solutions that best suit their needs.
Coming up with a sound budget is an essential part of managing your finances effectively. Your credit counsellor can help you develop a budget based on your income and debt to help you get a better handle on your financial obligations. This can help you avoid damage to your credit or worse, insolvency.
Your credit counsellor can speak with your creditors to negotiate an arrangement to either reduce what you owe, lower your interest rate, or extend the amount of time you have to repay your debt. Creditors may be more open to making such an arrangement with a credit counsellor working on your behalf, since they may already have established a record of successfully helping clients get out of debt while considering the best interests of creditors.
If you prefer to solve your debt problems yourself, there are a few things you can try including the following:
The most common option for debt relief is a debt consolidation loan; these can be secured or unsecured loans. The one you qualify for will depend on your financial situation.
If you’re stressed about credit card bills that are started to pile up, a personal loan that you’re having trouble keeping up with or predatory payday lenders that won’t stop harassing you, the first step you need to take is to ask for help, preferable from a debt specialist like a credit counsellor.
Setting up a meeting with a professional credit counsellor is the best way to start your journey toward a debt-free life. They will provide you with personalized information and help you decide what debt relief option is best for your situation.
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Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.
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