When you find bills are getting hard to manage, you might regain control through credit counselling services. Taking this approach can help provide the tools needed for paying debt off. Additionally, credit counselling services can assist in designing a long-term repayment plan for staying debt free. Debt counselling will have you working closely with financial professionals that have the skills to you become financially stable again, based on your individual situation.
How Using Credit Counselling Can Help
Losing control of debt can result in long-term problems on your credit history. For example, regularly being late on your credit card, car or mortgage payments will quickly lower credit scores. If this you do not quickly gain control of the situation, it can cause many issues. These include:
- Car repossession
- Not qualified for credit cards
- Not qualified for loans
Recovering from any of the above financial problems, the process if difficult and long. Therefore, it is best to regain control of your financial situation before becoming a larger issue, then keep debt under control. That is where credit counselling can benefit you.
How Does Credit Counselling Work?
Credit counselling is the process of reviewing your finances in detail to determine the best plan for you. A financial professional will evaluate your income, expenses and compare them to your overall debt, then discuss a long-term plan for paying off debt, and teaching you how to stay out of debt.
Credit counselling services can also include obtaining lower interest rates through negotiating with creditors or extending payment periods to lower monthly payments. With credit counselling services, consumers will have the tools needed for successfully becoming debt free and having a debt free future.
Benefits of Credit Counselling
With consumer credit counselling services, you will gain a clear understanding of each area of your finances, and how to get control of debt. Consumers can get new perspectives on the situation with the help of a financial professional, as they have the knowledge to provide steps for reaching your goals.
However, once you have the debt paid off you will still have a long-term plan to stay out of debt. For example, you might be working with a debt consolidation or debt settlement agreement to achieve your financial freedom. A debt counsellor can provide the information on which option would be best based on your goals.
Credit Counselling Disadvantages
Credit counselling services do have disadvantages. For instance, they do not lower the principal debt owed, only the interest rate or extending the period when possible. Therefore, consumers could be paying less per month, but be in debt for a longer period than other options, such as debt settlement. Additionally, credit counselling can have a negative impact on your credit report in Canada, as it is reported as an R7. This will impact your chances when applying for any form of credit. Furthermore, credit counselling companies are typically on the creditors side, and do not always focus on what’s best for the consumer.
Credit Counselling, Is It the Right Option?
If you have a lot of debt, credit counselling can offer advantages towards resolving debt. When faced with bankruptcy, credit counselling is the better option, but other options such as debt settlement can lower your total debt by 40% to 60%, and reduce the time it takes to become debt free. However, each financial situation is unique, which is why an in-depth review by a professional is recommended to determine the best option.
To learn more about debt counselling or scheduling a free debt consultation, fill out this debt relief form to get started!
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