What Are the Benefits of Credit Counselling?
Many are unaware of the great benefits of credit counselling. When dealing with the challenges of debt, no question that there is a benefit to seeking help. You don’t have to do this alone. Getting the support of a trained credit counsellor may make the difference for you to achieve debt-free status and getting your life back on track.
“If you’ve been struggling with debt, you might feel hopeless, ashamed or distressed about your situation. Chances are you are unsure of what your best strategy out of your predicament should be,” says Jeff Schwartz, Executive Director, Consolidated Credit Counseling Services of Canada.
Building a relationship with a qualified financial professional, like a trained credit counsellor, can provide you with the tools, planning and emotional support that you need to carry you through your debt repayment journey.
Are you dealing with debt? Are you ready to change the direction of your debt cycle and take steps forward toward achieving your financial goals? Call one of our trained credit counsellors at 1-888-294-3130 or get started with our free online debt analysis.
Here is what you need to know about credit counselling and a selection of the benefits that you can expect to experience:
What is credit counselling?
Credit counselling is rooted in providing an individual in debt trouble the education, tools, resources and awareness that they need about their finances to pay their debt down and responsibly manage their finances going forward.
Credit counsellors are trained professionals who are qualified to assess your financial situation and to help you determine which debt relief solution would suit your needs best. Many of the credit counselling agencies are not-for-profit, which is a good place to start. If a debt management program is the best solution for you; a credit counselling agency is the place to get one.
In a debt management program, you repay your debt in full to your creditors, but generally at a lower interest rate and in many cases 0%. You can preserve or even rebuild your credit history as you continue to pay your debt down.
Is credit counselling for me?
Credit counselling is best for people who are still able to make their payments but would benefit from a longer timeline to repay their debt. Similarly, it is beneficial for those who seek a reduction in interest rates to make their debt more affordable for their income.
What should I expect in my first session?
When you first meet with your credit counsellor, you’ll need to supply your net income, all of your debt information (including APR, balance and current payments on your cards and other debts), your monthly expenses (i.e. utilities, mortgage/rent) and spending estimates for other essential budget categories, like food and transportation.
This information will help your credit counsellor to determine what the best debt relief option is for you. If that happens to be a debt management program, your credit counsellor will move ahead to set up a debt repayment program that meets your budget, as well as advise you on what your likely timeline will be to pay down your debt.
Your credit counsellor will negotiate interest rates and late fees with your creditors (usually getting them reduced significantly). Going forward through your debt management program, you’ll make a single payment to your credit counselling agency who will disburse the payment to your creditors on your behalf.
You get expert advice with your best interests at heart
Although the benefits of credit counselling are numerous, one of the biggest ones is the fact that you have a trained financial professional “in your corner”. Your credit counsellor is an expert and they are truly invested in your financial success, which means having your best interests at heart.
That is part of the reason that you should vet credit counselling agencies to ensure you are working with an accredited, reputable agency. Ask for references, check the BBB and check out reviews.
Harnessing the power of financial literacy
Do you know what the secret of financial success is? Financial literacy. The more you know about your money and your options, the more likely you will be to make sound decisions going forward. Given that credit counselling is so heavily tied in with financial literacy, your chances of maintaining long-term success after participation in a credit counselling program are significant.
Your credit counsellor gives you access to all kinds of resources and educational material so that you can build your financial literacy. They teach you real-life tools, like budgeting, to help you manage your money for a bright financial future.
Deal with the creditors
Part of the stress of debt is having to deal with creditors when you are behind on payments. When you work with a credit counsellor, you don’t have to do that, as they deal directly with your creditors on your behalf. They negotiate interest rates at the beginning of the program and also approach them, if needed, during your debt management program to renegotiate terms (i.e. you’ve lost your job, etc.)
Getting and staying out of debt requires lifestyle changes that can be hard to implement, especially as you have to stick to them over the long term. When you are making changes like this, it can be extremely helpful to know that you have someone that you can count on to encourage you and provide you with valuable tips and tricks to stay on track.
Improve your cash flow
When entering into a credit counselling program and proceed with a debt management program, did you know that in most cases your monthly payments reduce a great deal? On average, people will see their payments reduced by 30-50 percent!
What this does is open up your cash flow, which lets you service your debt, cover your expenses in cash and put some money aside every month for savings. Having emergency savings is a crucial part of remaining debt free going forward.
“One of the major goals of credit counselling is to make your payments affordable for you so that you can reasonabley live within your means. This is another reason why budgeting is so important because it gives you the guidelines to do just that,” says Schwartz.
If you are struggling with debt, there is no time like the present to learn all about the benefits of credit counselling first hand. Call us at 1-888-294-3130 or check out our free online debt analysis.