
August 11, 2023
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8 min read
The most recent MNP Consumer Debt Index revealed that one-third of the 2,000 respondents are struggling to make enough to cover their bills and expenses. If you’re one of the many Canadians having difficulty with debt management, credit counselling can help you.
Credit counselling agencies can help you get a handle on your finances by working with you to create a realistic budget and developing a tailored debt management plan that suits your monthly budget. Credit counsellors can also negotiate with creditors on your behalf to develop manageable payment plans, reduce your interest rates, and set you on the path to credit repair and solvency.
If you’re having a hard time staying on top of your bills and fending off calls from debt collectors, consider pursuing credit counselling to help you get out of debt.
In this guide, we’ll unpack how to choose a credit counselling service with your best interests at heart and what to expect during the counselling process.
Credit counsellors offer various services to help you regain control of your finances, pay down your debt and avoid bankruptcy. Counselling services are typically tailored to your unique situation and may include things like:
Choosing a reputable credit counselling agency is paramount to regaining control of your finances. Unfortunately, there are many predatory organizations out there operating under the ruse of providing credit counselling while making bold promises to settle your debts for less than what you owe and repair your credit quickly.
Be wary of claims like these.
A reputable credit counselling organization will take a more measured approach to resolving your debts. They can help put you on track to settle your debts faster and work with your creditors to secure favourable repayment terms, but they can’t repair your credit overnight.
Keep the following points in mind before you sign on with a credit counselling agency:
A standard credit counselling process will look something like this.
First, you and your counsellor will review your financial information, including income, payment frequency, expenses, and debts. This information helps them understand how much money you have coming in, what you owe each month, and the cadence at which you are paid, which will inform your money management plan.
Next, your counsellor will go over your credit report with you. They’ll flag any derogatory marks they find and suggest how you can correct these to repair or improve your credit score.
Finally, your counsellor will use all the information you’ve provided to create a budget and debt repayment plan to help put you back on solid financial footing and improve your credit score.
During this step, your counsellor will work with your creditor to establish a manageable payment plan within the budget you’ve set. Once the creditor agrees to the program, you’ll sign off and begin making monthly payments.
If you’re fielding constant calls from debt collectors, your credit score has been damaged from missed or late payments, and you’re unable to stay on top of payments, credit counselling can be a powerful way to regain control of your finances.
Credit counsellors can help you overhaul your budget, create money management strategies that fit your financial situation, and work with your creditors to create realistic debt repayment plans that will get you back on track.
To make the most of credit counselling, be open with your counsellor about your current financial situation. They are experienced in working with individuals from all kinds of different financial backgrounds. Setting aside any shame or stress you’re carrying around your finances and being upfront with your counsellor will help them make strategic recommendations that will improve your financial wellness long-term.
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