Having debt can take a toll on anyone's mental and emotional well-being, but having too much debt, can lead to a vicious cycle of financial problems. And that risk only increases when access to credit products and loans (like payday loans or loans from second-tier lenders) becomes easier and easier to obtain.
When you accumulate debt to the point that debt becomes a dependence tool rather than fuel for growth (for example, a business loan, mortgage or student loan can lead to more wealth), it’s time for you to pause and reflect. This is when credit counselling steps in. How do you know when you have too much debt? A certified Credit Counsellor can help.
Signs That You Have Too Much Debt
- You are constantly late on your bills
- You often have to borrow to meet your bills
- You cannot keep track of how much you owe
- You are low on savings
- You have a high dependence on credit cards or loans to meet short-term obligations
If your debt keeps you awake at night, it's time to act. The irony is that by the time a person realizes they need help, they're usually in a critical situation where collection agencies are calling and bankruptcy is beckoning.
Credit counselling is a cheap and efficient way to ease the debt burden and help you get back in control of your finances before going off the deep end.
So, What is Credit Counselling?
Credit counselling is a process designed to help you as an individual debtor settle your debts using a variety of tools with the ultimate goal of reducing and eventually eliminating your unsecured debt entirely. There are a variety of tools, like a money management plan or a debt pay down plan. There is also free credit counselling, workshops, and resources to help guide you when it comes to money management and budgeting.
How Much Do Credit Counselling Services Cost?
Most non-profit credit counselling agencies will not charge you for their counselling services – we don’t.
During a first appointment, a certified Credit Counsellor will review all of your available options regarding whatever financial issues you're facing. If one of those options is a debt management or consolidation program, which we'll discuss more later, there is an initial set-up fee of about $50 and a minimal portion of your monthly payment goes towards administrating your account. An honest Credit Counsellor will disclose all of their fees beforehand and actively make the process seamless, while also maximizing your long-term benefits throughout the length of your program.
Ways Credit Counselling Can Help You Out Of Debt
You Will Get Free Expert Advice
Most non-profit credit counselling agencies offer free credit counselling to review your entire debt situation and financial position. The goal is to highlight issues that are relevant to you and your situation, and also form a ground for future discussions on possible solutions.
You Will Get a Closer Look at Your Financial Reality
Your Credit Counsellor will evaluate your earnings and expenses and then evaluate your debt with respect to interest rates, fees, and applicable penalties. This evaluation assesses whether or not good money habits alone are sufficient to get you out of debt or if a Debt Consolidation Program (DCP) is your quickest way to financial freedom.
You Will Get a Custom Budget/Spending Plan
A good certified Credit Counsellor will also help you create a budget. Paying down your unsecured debt will be an uphill battle if you don’t support it with smart spending habits. Through a careful evaluation of your spending patterns, you will get recommendations on what you should cut back on.
You Will Have a Balanced Look at Your Secured and Unsecured Debts
The goal here is to make sure that you can continue with your life – pay your bills on time, keep the lights on, buy groceries and pay your rent or mortgage – as you take more control over of your finances and build strategic goals. This will involve devising an efficient way to address your credit card debt, as well as any other unsecured debts you might have.
You Will Learn if a DCP is Right for You
When you’re on a DCP, your Credit Counsellor will negotiate with your creditors and work out an easy and efficient arrangement that will enable you to get out of debt in less than 5 years, usually between 2-4 years, but sometimes in as little as one year. This plan is designed to make getting out of debt simple, straightforward, painless, and effective. It also has two big advantages:
- It lowers or stops the interest on your unsecured debts
- It stops collection calls
You Will Get Help Evaluating the Need for Bankruptcy
While some people might think that bankruptcy is their only option, a good Credit Counsellor will give you a true evaluation of your full financial picture and provide you with the best solution that will minimize any negative impact, including on your credit score and long-term financial goals. They will also provide you with free credit counselling and guidance throughout the entire process. An honest and accredited not-for-profit credit counselling agency can help you put your finances in order.
At Credit Canada, we care about your financial well-being. For over 50 years, we have helped over 2 million people find relief from their debt. And it starts with our free credit counselling services, one-on-one money management support, and our free budgeting workshops and seminars. Contact us today to regain your financial freedom!
