What is Credit Counseling
Recent statistical data shows that nowadays, more and more Canadian citizens find it particularly difficult to manage their debts
. Being in debt is particularly unpleasant, as it may easily lead to distress or even depression: consider all the threatening phone calls and letters from banks and creditors, informing you that they are planning to foreclose on your property or have your paychecks redirected to their bank accounts until your debt is settled. This is quite scary, especially if you have children or other dependents.
Credit card debtors make the larger part of the credit counseling
agencies’ clientele. These debts are the easiest to accumulate and also have the highest interest rate. Sometimes borrowers find themselves unable to service their consumer loans or leasing plans due to unexpected deterioration of their financial situation such as job loss, payment cut, sudden or prolonged illness, retirement, etc.
Persons in need of credit counseling are those who cannot pay off the minimums on their credit cards
. They are often late paying
their utility and other bills, with collection agencies
and creditors calling on a regular basis. In addition, their efforts to negotiate repayment plans with one or more creditors have been unsuccessful.
There are many credit counseling agencies in Canada, and all of them are devoted to giving a breath of fresh air to all debt-ridden citizens of the country. In fact, debtors may get credit counseling advice and assistance while sitting in front of their computers. Many credit counselors offer online debt counseling services, as well.
When a credit counseling agency starts working with you, its experts will first make a thorough analysis of your financial situation. They will draw a balance between your earnings and the total amount of money you have to pay to your creditors each month. If your monthly income
covers the debt installments at their minimum, they will contact your creditors and try to negotiate with them to temporarily freeze some of your biggest debts. In this way, you could have more free cash at your disposal each month. When this problem has been taken care of, the credit advisors will make a prudent monthly budget for you to follow. In other words, your credit counseling agency will act as your private currency board, managing your finances until all of your debts are wiped out. Don’t just wait until the credit advisors work their magic to save you from the monstrous creditors. You’d better try and learn the hard lesson from your wretched state and be more financially responsible in the future.
Choosing a good credit counseling agency in Canada boils down to finding the optimal proportion between the fees that you pay to your credit advisor and the amount of useful information you receive from him. Some of the best reputed credit counseling centers in the country will offer you free debt management workshops and printouts. In addition, the initial consultation and debt analysis will be free of charge. On the other hand, you should stay away from credit advisors that want to make a good profit out of your misery.
Watch out for credit counseling services that take your monthly installments as a fee. They are required to pass them to the creditors, not take advantage of your money. Remember that missing payments may hurt your credit rating
. Some companies claim that they will settle your debt with no or little effect on your credit rating. Be realistic. Credit counselors can help you get rid of debt at lower interest rate but your credit rating will be affected.