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Credit counselling is the best way to provide education around proper money management. This includes budgeting, proper use of credit and debit and also the repayment of debt. Licensed Insolvency Trustees are also credit counsellors. They can help you develop a monthly budget and assist you with following that budget to reduce your debt.
What is Credit Counselling?
Credit counselling is a professional service that helps individuals understand and improve their financial situation through education, planning and guidance. It typically involves working one-on-one with a trained counsellor to:
Review your overall financial picture, including income, expenses, debts and goals,
Learn effective budgeting and money-management skills, so you can make better financial decisions,
Explore strategies for paying down debt, including negotiation with creditors or designing a manageable repayment plan, and
Discuss options available to relieve or restructure debt that may fit your needs.
In many cases, credit counsellors help you create a debt management plan, which can consolidate multiple payments into a single monthly amount, potentially with lower interest or extended repayment timelines. Credit counselling focuses on education and support, equipping you with tools to regain control of your finances, but not all credit counsellors are equal.
Licensed Insolvency Trustees (LITs) are federally regulated professionals who also provide insolvency counselling services, offering unbiased advice and a full view of all possible debt relief options.
Why Choose Allan Marshall for Credit Counselling?
At Allan Marshall and Associates, our trustees can provide a range of options for you, whether you simply need budgeting advice and better money management to pay bills, or a more concrete solution such as a Consumer Proposal or bankruptcy. How do you know if you may need credit counselling? There are warning signs to indicate that it may be beneficial for you. For instance, if you have outstanding debts that exceed your income and do not know where to start, you may wish to seek credit counselling. During counselling sessions with a Licensed Insolvency Trustee, they will assess your finances and discuss goals such as:
- Cutting unnecessary expenses and splurges.
- Focusing on paying off debts with higher interest rates
- Reviewing non-essential assets that can possibly be sold
Some of these goals may solve immediate financial problems, but the session may also help you evaluate whether you are able to repay your debts or should consider alternative solutions. Keep in mind, it’s impossible to erase information that is part of your credit history so improving your credit score takes time. You have to prove to your creditors that your habits have changed and that you are willing to pay back your debts on time.
How Credit Counselling Works with a Licensed Insolvency Trustee
- Initial Review: A certified Insolvency counsellor reviews your finances – income, debt, spending, and budget.
- Personalized Plan: Based on your situation, a plan is created to help you manage and repay debt.
- Budget Guidance: You receive guidance on cutting unnecessary expenses and prioritizing bills.
- Ongoing Support: You’ll get ongoing education, motivation, and regular check-ins to stay on track.
Benefits of Credit Counselling
Choosing credit counselling can help you:
Get a Clear Roadmap for Your Finances
Counsellors help you organize your finances, cut unnecessary spending, and create a realistic debt-repayment plan.
Learn Better Money Management Skills
You’ll learn budgeting techniques and spending habits that help prevent future debt stress.
Simplify Your Payments
Depending on the program you choose, your counsellor will review what steps are involved and how your payment structure will work. A LIT will contact creditors on your behalf and deal with any issues throughout your repayment plan.
Professional Support
Talking with a certified financial professional gives you perspective, answers to questions, and ongoing encouragement.
Is Credit Counselling Right for You?
Consider credit counselling if you:
- Consistently struggle to pay bills on time
- Have high-interest credit card debt or multiple monthly payments
- Need help understanding your finances
- Want to avoid bankruptcy if possible
- Are ready to learn how to budget and improve money habits
What About Credit Counselling Companies?
There are many benefits of using a Licensed Insolvency Trustee instead of a credit counsellor from a credit counselling company.
- Credit counselling companies, even not for profit, are often paid a fee from the companies you owe for collecting the money from you. They may also request you to pay a fee for negotiating repayment terms with your creditors. Care should be taken by debtors that they allow themselves sufficient income for a reasonable cost of living before committing to any payment schedule from outside credit counselling programs. Licensed Insolvency Trustees are restricted on what they can charge by the Bankruptcy Insolvency Act. They also provide free consultations and no upfront fees.
- Credit Counsellors may be limited to just one approach and may not have the background to be able to provide alternative debt solutions. A Licensed Insolvency Trustee is required by law to discuss ALL options for your debt relief.
- Credit Counsellors are not federally licensed and do not have any power over your creditors. A Licensed Insolvency Trustee can provide you with full protection from creditors by filing a Consumer Proposal or bankruptcy. Filing a Consumer Proposal stops interest and penalties and often can be less expensive than credit counselling programs.
Before committing to a credit counselling program elsewhere you should talk to a Licensed Insolvency Trustee firm. Allan Marshall & Associates Inc. will discuss with you all of your debt options.
Common Credit Counselling Questions
How is Credit Counselling different from informal debt settlement?
- An informal debt settlement is action taken by yourself, the debtor, to contact your creditors and negotiate debt repayment terms. Credit counselling is offered by a trustee who can contact creditors on your behalf and provide you with education and counselling throughout your repayment plan.
Many places offer credit counselling services, how do I know if it is reputable?
- First, avoid any credit counselling service that promises to make all your problems go away overnight or promises to erase ALL debts in one payment. They are often disreputable agencies that may use fraudulent tactics and can charge you fees that you will never see again.
- The goal of credit counselling is NOT to make all financial problems disappear miraculously, but to guide you through the process to change your financial habits yourself. With the help of a Licensed Insolvency Trustee, you receive a free consultation to review your finances. You’ll be able to see if credit counselling may be all you need to get over that hump or if other services may be of more benefit to your situation.
Frequently Asked Questions (FAQs) about Credit Counselling
Credit counselling is a professional service that helps you understand your financial situation, create a budget, and explore options to manage or reduce your debt. A trained counsellor reviews your income, expenses, and debts and offers strategies to help you get back on track financially.
Credit counselling provides guidance on budgeting and money-management, and may include a debt management plan (DMP), which combines multiple debt payments into one affordable monthly payment. A counsellor may also negotiate with creditors to reduce interest or fees.
Simply talking with a credit counsellor does not affect your credit score. However, some formal programs like specific consolidation plans may be noted on your credit report, and any missed payments outside a plan can affect your credit.
Many reputable credit counselling agencies offer free or low-cost sessions. Member agencies of national associations often provide clear fee disclosures before services begin.
Look for agencies that are members of recognized associations or non-profit organizations. Avoid companies making promises to fix credit instantly or erase debt without payment – these are common red flags.
In many debt management plans, you still repay 100 % of your debts, but often with lower interest or extended timelines. This is different from a consumer proposal or bankruptcy, where portions of debt may be reduced.
Yes, anyone who needs help managing money and debt can receive credit counselling. Services are typically available across Canada, including remote options by phone or online.
No. Credit counselling focuses on budgeting and debt management. Only a Licensed Insolvency Trustee (LIT) can explain and administer formal insolvency options like consumer proposals or bankruptcy.
The initial session usually takes about an hour or less. The overall debt process depends on your financial situation and the specific plan you choose.
The information contained on this website is intended as a general summary of options, when dealing with financial problems, and is not intended to replace professional advice. We encourage you to contact Allan Marshall & Associates Inc for a free consultation to discuss your options.
Call toll-free: 1 (888) 371-8900
Contact us today to learn more about proper money management and debt repayment strategies to help manage your finances.
