What is Credit Counselling?
Credit Counselling in Canada
Credit counselling organisations, either profit or non-profit, help people to understand why they got into debt in the first place and give them advice on how to improve their financial situation.
Credit counsellors are usually qualified professionals that will work with you to put a plan in place to turn your finances around and, in some cases, they can be very effective.
However, credit counsellors do not always offer the solution to your debt issues and you have to be aware of unlicensed credit counsellors.
This page will answer the question, what is credit counselling and help you to decide if it is right for you.
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Benefits Of Credit Counselling
Credit counselling can be useful for people that want to get out of debt but do not want to resort to bankruptcy or other debt relief options.
Debtors benefit from an experienced professional that can advise them on money management, give them clear steps to follow, and refer them to other services that may help.
The benefits of a credit counsellor include:
- Better understanding of the problems that cause debt.
- Improved money management skills.
- Negotiating with creditors.
- Ongoing support.
Negatives Of Credit Counselling
Although credit counselling can sometimes be beneficial, there are a lot of negatives that you need to consider.
Credit counsellors cannot offer bankruptcy or consumer proposal services, which are often the best option for people with serious debts.
In many cases, paying a credit counsellor will not reduce your debt in any meaningful way.
Other drawbacks to credit counselling include:
- A negative impact on your credit rating, which is equal to the impact that a consumer proposal has.
However, a consumer proposal is a more effective way of dealing with debt.
- It takes longer to pay off debt than it would if you filed for bankruptcy.
- Consumer proposals can guarantee results in 1 to 5 years but credit counselling services can take much longer to get results, if at all.
- Unlike a Licensed Insolvency Trustee, credit counsellors are not required to be licensed or certified in any way.
This effectively means that anybody, regardless of their experience or knowledge, can take your money in exchange for credit counselling services.
It’s important that you are careful if you are going to use a credit counsellor because you could be paying for somebody with no experience and they will not help you to reduce your debt in any way.
You are safer when going with a non-profit organisation, but even then, they cannot always provide the same assistance as a Licensed Insolvency Trustee because they cannot provide bankruptcy or consumer proposal services.
If you are concerned about your debt issues, we can provide a range of debt relief options to help you pay off your debts as quickly as possible.
Get in touch today and our expert team can assess your situation and advise you as to which option is best for you.
You can reach us by phone or fill out an evaluation form and we will get back to you.