Comparison Of Credit Counseling And Credit Counseling
Worldwide, economies have experience an economic tailspin the likes of which most people have only heard stories about from parents. The good news is that signs of an economic recovery on the horizon are everywhere. Unfortunately many people have found themselves burdened with debt and are in need of concrete ways to manage their debt. For many the situation is critical and they need sound financial advice and credit counseling from an expert.
Many people think in terms of bankruptcy as a solution or they may seek out a credit counseling expert to help them resolve their problems. Daily they are bombarded with television and radio commercials promoting assistance with filing for bankruptcy, as well as offers of Calgary credit counseling, as a way to help them manage their debt load.
No one wants to go through the pain of personal bankruptcy or the stigma that is attached to it. Personal bankruptcy can affect you for years. Agencies that specialize in credit counseling are often unaware of another option that is available to their clients. Due to a lack of publicity, few know of it and even fewer credit counselors offer it as an effective alternative for their clients to implement. A good credit counselor will understand this option and will educate clients on how to utilize the option of a Consumer Proposal. Its use and benefits are discussed below.
Agencies that offer credit counseling are comprised of ones that are for profit as well as ones that are non-profit. Both types of agencies will charge a fee for their services. You can expect them to formulate a Debt Management Plan that meets with your approval. They will then present the plan to your creditors. This will not include creditors that have secured their loan. These usually include home mortgages and loans on an automobile.
A Consumer Proposal is a concept whereby a credit counselor approaches your creditors with the intention of getting them to lower the percentage of interest you currently pay and waive any late fees that may have been added on to your account. In return you agree to a payment plan that is more manageable. You will make these payments to the credit counseling service and they will pay your creditors. All credit accounts that you currently have will be closed.
Some debt may be so large that it will restrict you from qualifying for credit counseling. There are differences that you need to understand when it comes to a Debt Management Plan or a Consumer Proposal. It’s important to know the differences before you call a credit counseling service.
A Debt Management Plan will not decrease the total amount of debt that is owed. It simply makes the payment schedule more manageable by restructuring it. For example, if your total unsecured debt is $30,000, then you will be remitting the whole amount, through a manageable repayment plan, as well as any fees owed to the credit counseling service
With a Consumer Proposal, you can actually negotiate a reduction in the total amount you owe, reducing that $30,000 in debt to $15,000 and perhaps lower. In addition, Consumer Proposals afford legal protection unavailable with a DMP. If your wages are already under garnishment the law specifies it must stop under a Consumer Proposal while cessation of garnishment under a DMP is at the voluntary discretion of the creditor.
Since a Consumer Proposal is a binding legal agreement the government requires consumers to secure the services of a licensed professional bankruptcy trustee to file one. Unfortunately, some consumers who are aware of the existence of bankruptcy trustees avoid talking to them, thinking they only handle bankruptcies.
In fact, they are highly trained professional debt advisors who can help you evaluate your current financial situation and walk you through all of the available debt solution options, including both Debt Management Plans and Consumer Proposals. The initial consultation is free so why not do yourself a favor and give one a call. You have nothing to lose but a little time and everything to gain.
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- Bankruptcy or Consumer Credit Counseling?
- Debt Management Credit Counseling
Tags: bankruptcy, consumer proposals, Debt Relief, trustees