Is Credit Counselling Right for Me?

Credit counselling

If you are struggling financially and feel you need debt help, credit counselling agencies offer services which can point you in the right direction. Credit counselling may be the perfect solution for some, but it is not the right solution for everyone.

Credit counselling is best suited if you need professional help to:

  • Understand and manage your finances;
  • Control your debts and use credit wisely,
  • Talk with your creditors to negotiate time to repay your debts.
  • Improve your credit report and credit score.

Credit counsellors are the people who can negotiate a debt management plan for you. This is a great solution if:

  • You have credit card and bank loan debts totalling under $10,000
  • You have a limited number of creditors (no more than five)
  • You don’t qualify for a debt consolidation¬†loan but still want to repay your debts
  • You have a good income and can afford to make payments
  • You need time to repay and relief from interest and penalty charges

When credit counselling might not work?

Credit counselling and a Debt Management Plan are not be the correct solution for everyone. It will probably not be right for you if:

  • You cannot afford to repay all of your debts in full within five years, even with interest relief
  • You have more than $10,000 in debts or have more than 5 creditors
  • You have other debts like tax debts or student loans

If you cannot afford to pay all of your debts in full, but still want to negotiate payment arrangements with your creditors, a consumer proposal may be a better option than consumer credit counselling, because with a consumer proposal it is possible to negotiate payments of less than 100 cents on the dollar.

For example, if you have $60,000 in credit card debts a debt management plan would cost approximately $1,000 per month for five years. If you can only afford $500 per month, a consumer proposal may be a better option. If you can’t even afford that, personal bankruptcy may be required.

To talk about credit counselling and other debt relief options, contact an advisor.

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