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Credit Counselling Services – Can They Solve My Debt Problem?

Maybe a friend said something or an advertisement caught your eye, ‘credit counselling services’ … and you are wondering if it might be a solution to your debt problem.

Its purpose is to help you to get out of debt and to provide you with the necessary tools to stay out of debt.

Credit counselling entails some or all of the following:

  • Budgeting advice
  • Financial education
  • Repayment plans, for some types of debt
  • Negotiating with creditors

Credit counselling is best suited to you if you are able to pay your bills but are finding it a constant struggle.

However, it’s not the only option open to you and often may not be the best option.

Unfortunately, consumer credit counselling does not provide you legal protection from your creditors. So if, for instance, one creditor doesn’t agree, your repayment plan will not work out and then your creditors can take you to court, garnish wages or hand your account over to a collection agency.

The term often used by credit counsellors is Debt Management Program (DMP).  A DMP is a request from a credit counselling organization to stop the interest on your debts and to term out the payments over a period of time, similar to a Consumer Proposal. However, DMP’s requires all creditors agree, they are ineffective against government debts such as income taxes, they do not stop garnishments or legal proceedings and are unable to compromise the debts to a more manageable amount owing.

Therefore, if your debt is large and or your financial situation is ‘precarious’ then it probably makes sense to explore a debt solution that provides you legal protection.

There is a more fundamental question you should be asking yourself right now… and that is, “If credit counselling is one option – what are my other options?”

The three most common alternatives to credit counselling are:

If you go directly to a credit counselling agency it is unlikely that you will have those other options discussed with you in any depth or accuracy.

In matters of personal finance one size never fits all – so it is essential that you discuss the specifics of your situation with someone who is wearing a tool belt, not just carrying a hammer. A professional who is well-versed in all the solutions, so you choose the solution best suited to your needs.

‘Licensed Insolvency Trustees’ or LITs for short, are the most thoroughly trained debt professionals in Canada. They can provide credit counselling or refer you to a reputable credit counselor if they don’t do it themselves, and can provide you with other options so you can choose the right option for your situation.

LITs carry a license from the Canadian government and are able to provide you legal protection from your creditors when filing either a Consumer Proposal, a division one proposal or a personal bankruptcy. No other type of debt professional has this much training or power to help you.

You can call our office to-day and speak to a Licensed Insolvency Trustee and begin your own path back to financial health.

John Adamson, Licensed Insolvency Trustee Ontario

John Adamson, CPA, CMA

John is a Licensed Insolvency Trustee (1994), a Chartered Insolvency and Restructuring Professional (CIRP – 1994), and a Chartered Professional Accountant with a Certified Management Accounting designation (CPA, CMA – 1992). His experience includes more than 25 years of helping individuals, small businesses, their owners and even lenders, find solutions to their debt problems.

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