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Why Credit Counselling Often FAIL to deliver the relief you need to get out of debt

Why Credit Counselling Often FAIL to deliver the relief you need to get out of debt?

Credit counselling is a process that involves offering education to consumers and establishing a debt management plan to repay the outstanding debt.

If you are behind on payments for unsecured debt, credit counselling agencies can help you get back on your feet. Credit counselling is one option that debtors should seek to avoid bankruptcy, but credit counselling is expensive and tedious

Credit counselling may not be an option if your debt load is too heavy.  Creditors have a limit on the amount of money that they are willing to accept to settle a debt. This means, that a credit counselling agency may not be able to reduce your debt significantly enough to totally eliminate it.

A word to the wise, remain cautious when choosing a credit management counsellor.  The industry has many fly-by-night outfits that can disappear with your money, and damage what remains of your credit. Also there are good one – you just have to do your research.

Let’s explore the advantages and disadvantages of credit counselling.

What are the advantages of Credit Counseling?

Credit counselling has few advantages. The credit counselling agency can:

  • Negotiate zero interest rates and a payment plan where they can
  • Offers an end to your creditors’ harassment or legal action against you
  • Can teach you how to budget

What are the disadvantages of Credit Counseling?

Credit counselling has many disadvantages:

  • Some lenders may not lower their interest rate to zero or accept a payment plan.
  • You will end up paying back 100% of your outstanding debts without interest for a maximum of five years.
  • Fifty percent of people who engage credit counselling services successfully complete their plans, the other half, drop out or file for bankruptcy.
  • Creditors will report to the credit bureaus that you are in credit counselling. Credit counselling has less of an impact on your credit than bankruptcy or consumer proposal.

How Are Credit Counseling Agencies Paid?

Most credit counselling agencies’ fees are paid by the lenders themselves. They get paid by holding back a certain percent of your payments for their fees.  Some critics complain that the credit counselling industry is just a tool of the lending industry.

Do not despair! If credit counseling is not be the right option for you, there are more effective options that enable you get out of debt faster.

Click here now to fill out our no-obligation financial assessment.

If Credit counseling is the option for you, we will refer you to a reputable credit counselling agency.

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September 26 2007 – We came to you as first time buyers with some consumer debts after our bank gave the running around, seeking mortgage, we got home with far beyond that. Not only had you secured us an approval within 24 hours, you gave us the best rate at the time, and long lasting debt management help that has saved us considerable money and widened our smile; you helped changing our lives to the better.
Walid Bechara & Farah Dbouk
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Bruce and Joanne H.
September 19 2007 – Based on the information he provided we were able to choose a strategy that was best suited to our situation and constraints. As such, he showed us how to use discipline and pay off our debts to then build and emergency fund and to invest our savings in vehicles I would not have come across talking to my banker. He taught me about tax savings and leveraging existing rules to increase my retirement fund using money the government would have simply kept to himself!
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