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  • How Does Credit Counselling Work?

    How Does Credit Counselling Work?

    Sandra Sherk

    If you’re like many Canadians struggling with debt, you may be looking for a way out (and a way to stop those pesky collection calls). However, you may not know what options are available to you—or which options are the best for your personal situation. Here are two common questions we receive from many first-time callers.

    What is Credit Counselling?

    Credit counselling is a service that offers you solutions for getting out of debt, and even more importantly, staying out of debt in the future. You should look for a credit counselling agency that is a registered non-profit and an accredited member of a national organization, such as Credit Counselling Canada.  Also, be sure the counsellors are certified and professionally trained.

    How Does Credit Counselling Work?

    If you choose to work with Credit Canada, a certified counsellor will offer you expert advice and financial options tailored to your specific needs. Our services are strictly confidential—we cannot and will not contact anyone without your prior written consent. Also, any recommendation provided is completely voluntary. It is up to you to decide what's the best option for you to deal with your financial challenges.

    Your First Appointment

    Your first appointment will consist of a full Debt Assessment. You and your counsellor will look at your monthly income and expenses, as well as assets and debts to determine your current financial status. They will stress the importance of looking at both your regular and irregular expenses to help you better understand how to manage life's surprises and expenses. This assessment is very detailed because it's important to know where you stand to determine how best you can move forward. This can be an overwhelming process to do on your own, but with a certified counsellor guiding you through this process, it becomes much more manageable.

    Mapping Out a Plan

    Your counsellor will then review possible debt solutions with you, and help you map out the best path forward. Solutions may include a workable budget that allows you to meet all of your financial commitments, or a debt consolidation loan with your own bank or credit union, or a Debt Consolidation Program (DCP) with our agency. A home equity line of credit might also be a viable option for you, or for some people, insolvency might be their best option, which could mean a consumer proposal or as a last resort, bankruptcy.

    Your counsellor will explain all the different options, what's involved in each, and how they may or may not be the right fit for you. Your counsellor will also discuss the impact of each option on your credit rating—as well as the impact of doing nothing about your debt. If the best solution isn’t a service offered by our agency, we can provide you with referrals for the right solution.

    Choosing a Debt Consolidation Program

    If you decide to go on a DCP with Credit Canada, the program will be laid out for you so you have a complete understanding of the process. Your counsellor will explain how Credit Canada acts as a middleman between you and your creditors, negotiating with them to get interest rates reduced or even waived. Your payment plan will also be discussed, including the fact that your monthly payment will be put into a trust account and then disbursed to your creditors on a monthly basis. Your counsellor will also explain how you can qualify for a secured credit card while you are on the Program, to help rebuild your credit, and an unsecured credit card once you've successfully completed the Program. 

    Learning Money Management

    If you choose a DCP as the best option for you, you will also recieve Money Management and Budgeting assistance. Your counsellor will help you create a realistic workable budget and spending plan, review factors that might be holding you back, and discuss ways to help you achieve your financial goals. While typical DCP programs only last about 36 months, these money management skills will last you a lifetime!

    Ready to Change Your Future?

    Credit Canada is here to help you with your financial concerns and problems. Give us a call and schedule your free counselling session. This step alone could eliminate stress and be the beginning to a debt-free life without sleepless nights, family arguments, and collection calls. You have nothing to lose—only a lot to gain!

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    Topics: Credit Counselling

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