When you are considering various debt relief options in Canada, there are always several questions that you should ask yourself:
- How much will this debt relief option cost me?
- Will this debt relief option affect my credit?
- How long will it take to get out of debt using this program?
- Will this debt program help keep me from getting in over my head in debt again?
Who Will Credit Counselling Help?
If you owe less than $10,000 in consumer debt, the negotiated interest rates and other benefits of consumer credit counselling will likely be helpful to you. If you owe more than that to your creditors, you will likely benefit more from a debt solution that can reduce your principal balance such as debt settlement.
Credit counselling is also designed for those who can still make their minimum monthly debt payments even if their finances are a bit tight. It can even work for those who could make their debt payments if they were to get their creditors to reduce the minimum that must be paid each month on their debts. However, if there is no way that you could make your debt payments even if they were to be lowered, you will likely need to look seriously at whether or not you qualify for bankruptcy.
Advantages of Consumer Credit Counselling
A credit counselling agency can:
• Teach you how to live on a budget. This has long-term positive consequences for your finances because if you can live on less than what you make, you will not be forced into potentially credit-damaging solutions in the future such as the consumer proposal or bankruptcy.
• Negotiate a better interest rate on your existing debt than you can negotiate yourself. If you get a lower average interest rate as the result of these negotiations, your minimum payments will be lower. Lower payments are easier to manage, reducing the risk that you will get far behind on your debt. They also help you accelerate your payments, as more of your money can go directly towards the principal.
• Reduce Stress by helping you make real headway in paying off your debt by negotiating better terms with creditors and in teaching you how you can avoid too much debt in the future.
Can Other Debt Relief Options Help Me?
To learn more about your options and whether or not credit counselling is the best option for your situation, fill out the debt relief Canada form.