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Credit Counselling Process

Your Guide to the Credit Counselling Process

If you’re experiencing financial difficulties, you may wish that, with just a snap of the fingers, you could eliminate your debt. The truth is, while debt is easy to accumulate, it’s harder to get rid of.

There is, however, a way out. In order to eliminate your debt, you have to spend less, and budget more.

That’s easier said than done, because when it comes to your debt, you may not even have the tools or knowledge you need to do so.

Which is precisely why one possible way out of debt is through the credit counselling process.

What is the credit counselling process?

The credit counselling process helps you sort out your debt issues by providing you with the tools and information you need to effectively manage your personal finances.

It includes:

  • Budget Education – Learning how to create and put into place a budget you can work with.
  • Credit Education – Understanding how credit usage works (such as how interest compounds, why you don’t just want to pay the minimums on your credit card, etc.).
  • Debt Management Assistance – Negotiating a payment schedule with your creditors.
  • Financial Planning Assistance – Developing a financial plan that supports your goals and priorities.

Who needs credit counselling?

When it comes to money matters, being proactive is key. Like any problem, if steps are taken early to catch the problem, you can prevent them from becoming major problems.

So if you’re worried that you might not make your next mortgage payment, or you’ve started to miss due dates on your credit cards, reach out for professional assistance early.

Other warning signs include:

  • Maxing out your credit cards.
  • Paying only the minimums on your credit cards.
  • Utilizing alternative cash sources, such as borrowing money from friends or family, getting cash advances on your credit cards, or taking out payday loans.
  • Receiving collection calls.
  • Hiding bills from your spouse.
  • Not opening your bills for fear of what you’ll find inside.

How do I get credit counselling help?

The first and best place to start is to contact a Licensed Insolvency Trustee (LIT).

LITs are the most highly trained and qualified debt-experts in Canada.

They are also federally-licensed, federally-regulated, and the only professionals authorized by the Canadian government to help individuals file personal bankruptcy and Consumer Proposals. This means LITs are required to follow strict ethical standards and obtain ongoing professional education. As such, you will be receiving unbiased professional services from the most qualified, well-educated professionals around.

What’s more, LITs are qualified to provide a full range of debt relief services, including credit counselling. At your free initial consultation, your LIT will review your financial circumstances and provide you with all the debt relief options available to you.

What are some pros of credit counselling?

  •  You’ll finally have the tools and information you need to get a handle on your debt.
  •  You won’t have to sell your home, car, or any other assets.
  •  If you proceed with debt consolidation, you can repay your debt with only one payment per month.
  •  Your debt will be paid off within 3 to 5 years.
  •  You can eliminate or significantly reduce interest rates.
  •  You will have peace of mind knowing you are dealing with your debt.
  •  If you’re on a debt management plan (DMP), only your creditors will be aware of this – unlike bankruptcy.
  •  If you are on a DMP, all debts will be erased from your credit report quicker than any other debt relief method (2 years after finishing the last program or 6 years after you start, whichever is first).

Cons of Credit Counselling

  • DMP is reflected on your credit report. But keep in mind that repaying your debt is better than not doing so or filing for bankruptcy.
  • It may not be the right solution depending on who your creditor is and how much you owe.
  • Creditors must agree to your repayment plan.
  • You need to come up with your monthly payment.

Bankruptcy vs. Credit Counselling – Which is right for me?

Every debtor’s situation is unique. By thoroughly reviewing your financial circumstances, we can help you figure out whether personal bankruptcy, a Consumer Proposal or some alternative is the right solution to your debt problems. You’ll also have access to our seasoned financial advice from a Canadian Government Licensed Insolvency Trustee on what we believe is the best option for you.

Contact a Licensed Insolvency Trustee Today

Seeking assistance in the form of credit counselling is typically a debtor’s first step to financial well-being. So pick up the phone today and get started on the road to better financial health. We look forward to hearing from you.

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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