Household debt in Canada has reached near epidemic proportions. According to Bloomberg Businessweek, our country’s citizens now owe a total of $2.15 trillion in debt—you heard that right, trillion! It’s no surprise then, that the number of Canadians filing for bankruptcy has skyrocketed, reaching levels not seen since the fallout from the 2008 financial crisis.
If you’re like one of the 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 all the options available to you—or which options are the best for your personal situation. Credit counselling may be the answer! Here are four common questions we receive from many first-time callers seeking debt counselling help.
1. 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 organization, is an accredited member of a national organization (such as Credit Counselling Canada) and has achieved an A+ rating with the Better Business Bureau. At Credit Canada, we’re proud to say we meet all the criteria!
2. How Does Credit Counselling Work?
When you work with a reputable non-profit debt relief agency like Credit Canada, you’ll receive free credit counselling services which involves reviewing your financial situation and making recommendations. Credit Canada’s services are strictly confidential—we cannot and will not contact anyone without your prior written consent. Also, any recommendation provided is completely voluntary. It’s up to you to decide what's the best option for you to deal with your financial challenges.
3. What Do Credit Counsellors Do?
Credit counselling services consist of trained professionals who offer money management advice and strategies. They use their expertise to help people get out of debt or improve their financial skills. At Credit Canada, our Credit Counsellors have an average of 10 years of experience in the field, and each is certified as an Accredited Financial Counsellor through the Association for Financial Counselling & Planning Education (AFCPE).
4. What Is the Credit Counselling Process Like?
Now that you understand what credit counselling is and what Credit Counsellors do, we’ll give you a peek at Credit Canada’s process, from your first appointment to completing a Debt Consolidation Program. Remember, credit counselling is completely free, and Debt Consolidation Programs are completely optional; there’s no obligation and no pressure.
Your First Appointment
Your first appointment will consist of a full Debt Assessment. You and your Credit 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 resulting expenses.
This assessment is very detailed because it's important to know where you stand to determine your best debt management plan moving forward. This can be an overwhelming process to do on your own, but with a certified Credit Counsellor guiding you through this process, it becomes much more manageable. During your Debt Assessment, be sure to ask questions. This isn’t a one-sided conversation, but a dialogue between you and your Credit Counsellor that can ultimately change your financial future.
Mapping Out a Plan
You may feel panicked by your overwhelming debt, but your Credit Counsellor will be able to ease your mind, reviewing possible debt solutions with you and helping you map out the best path forward. Solutions may include tracking your expenses and maintaining a workable budget that allows you to meet all of your financial commitments, paying down debt using the snowball or avalanche method, taking out a debt consolidation loan with your own bank or credit union, or entering a Debt Consolidation Program 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 the right referrals for the right solution.
Choosing a Debt Consolidation Program
If you decide to go on a Debt Consolidation Program with Credit Canada, the program will be laid out for you so you have a complete understanding of the process. Your Credit 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 repayment plan will also be discussed, including how your monthly payment will be put into a trust account and then disbursed to your creditors on a monthly basis.
Your Credit Counsellor will also explain how you can qualify for a secured credit card while you are on the Program. With a secured credit card, you load it with your own money online, and use it like a debit card. However, once you’ve reached the amount you allotted yourself, it stops working until you reload it with more money. This way, you never run into any overdraft fees or have to worry about not being able to make a payment. The card also helps rebuild your credit. Following the completion of the program, your Counsellor can discuss how you may be able to get an unsecured card—but many clients say they never want to have one again!
Learning Money Management
If you choose a Debt Consolidation Program as the best option for you, you will also receive money management and budgeting assistance. Your Credit 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 find debt relief and achieve your financial goals. While typical Debt Consolidation Programs only last about 36 months, these money management skills will last you a lifetime!
Our Clients Weigh In!
Over the years, we’ve helped more than two million Canadians learn better money management skills and get out of debt. We could talk all day about it, but sometimes it helps to hear it straight from the horse’s mouth! Here are three of our favorite reviews.
[Counsellor Jean Riddell] is wonderful to work with. She made things clear and as painless as they could be. She encouraged us along the way, went to bat for us when things were complicated, and we are happy and proud to have sorted out our finances while establishing better habits during the repayment process. - Susan Kendal
[Counsellor Doris Asiedu] Credit Canada Debt Solutions was a blessing to me and my family in our time of need. Talking with Doris really enlightened me to better options than bankruptcy. After my appointment, it felt like a great weight was lifted off my chest. I would suggest this to anyone who's in the same situation. - Kris Jayasingha
Credit Canada is the place to go when you need help and advice to get out of debt. [Counsellor Sandy Daykin] was by far the best. She gave the best advice and help. Now, thanks to the help I received, I am very happy to be debt-free. Plus, with their help, I have a good-sized savings account. They took the stress out of my life and I'm so thankful for that. Call them today!!!!!!!!! - Pat Bennett
Need Credit Help, Canada?
We hope you’ve found this credit counselling summary useful, and if you’re ready to tackle your finances, Credit Canada is here to answer all your questions and uncover solutions. If you’re not yet ready to speak with a professional, we offer dozens of free resources on our website that may help you find the debt relief you’re looking for. Otherwise, give us a call today at 1.800.267.2272 and schedule a free counselling session. This step alone could eliminate stress and be the beginning of 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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