Credit Counselling

Debt Management through Credit Counselling

With a credit counselling agency, you consolidate your bills by working with a counsellor who will help you determine a monthly payment plan that will satisfy a minimum amount of the debt.

A credit counselling program typically lasts for about five and a half years. The debt agency you work with will contact each of your creditors and offer a proposal to lower the interest rate to a reasonable level. 

With a substantially lower interest rate and a consistent payback schedule, you can reasonably expect to be debt-free at the end of your program.

However, there are disadvantages to debt management through a credit counselling agency. While you are a part of the credit counselling program, your agency and/or creditors will report to the credit bureaus that you are a client.

Until you complete the program your credit report will be flagged, and some financiers may not extend credit to you until you have finished your credit counselling program is finished. Additionally, some of your creditors may fail to accept the proposal of the counselling agency, so it is imperative to stay informed so you do not underpay them.

If all of your creditors accept the proposal from the credit counselling agency and you stick to your debt management plan, your credit will be impacted very little at the end of it all, but essentially will be frozen until that time.

A consumer credit counselling agency will typically save you money in comparison to a debt consolidation loan, and will also take you less time to become debt free.