I Need Help With Credit Card Debt
Question: I have two credit card debts both for $5000. This September will mark 2 years that I have not made a payment. I do have $5000 in savings that I will be using to move. I would like to go to credit counselling but I am anxious that I will have to use my savings. I am anxious that there may be a court settlement regarding these debts that I am not aware of. Are government credit counselling services obliged to divulge my contact information to creditors or law inforcement if I request their services?
Credit Card Debt Settlement
First, in most provinces credit counselling agencies are private not-for-profit agencies; they are not run by the government. Their job is to work out a settlement plan with your creditors, often in the form of a debt management plan. To do this they will communicate with your creditors, although legally they are not required to disclose anything you don’t want them to disclose. In your case the settlement plan to eliminate your credit card debt may involve you paying $200 per month for 50 months, which would pay off the debts in full, and would still allow you to use your savings to move.
Another possible option would be to file a consumer proposal, where you offer to use some of your savings towards a lump sum settlement, with additional payments over time. For example, you could offer to pay $2,000 upon acceptance of the proposal, and then $200 per month for two more years. In that example the credit card companies don’t get all of their money, but it may be enough for them to be satisfied. However, all assets must be disclosed in this process, so the advice of a trustee is necessary before proceeding.
There are costs to a credit card debt settlement agreement in terms of the impact on your credit score. However, having missed payments for two years, it is likely that the damage has already been done. The bottom line is that credit card debt settlement, either through a credit counselling agency or a consumer proposal, can be an effect way of reducing your credit card debt and begin the process of repairing your overall credit.