Credit Counselling

Credit Counselling with a Licensed Insolvency Trustee:

A Licensed Insolvency Trustee will provide credit counselling from a registered insolvency counsellor as part of every proposal or bankruptcy process. The counselling is required by the Bankruptcy and Insolvency Act and is provided to help you regain control of your finances and help support you getting back on track financially. The counsellor will provide advice and information regarding the following issues: money management, spending and shopping habits, warning signs of financial difficulties, and obtaining and using credit. The counsellor will also review the strengths and weaknesses of your budgeting and money management, as well as identify and provide resources for non-budgetary issues like compulsive behaviours, substance abuse, employment, and marital or family issues.

Credit Counselling and Debt Management Programs without a Licensed Insolvency Trustee:

Debt management programs and debt settlement arrangements through private companies or credit counselling companies do not involve a Licensed Insolvency Trustee and usually involve a person or a company that will try to arrange a settlement or a payment arrangement with your creditors for a fee. Debt management programs and debt settlement arrangements can be difficult to negotiate if you do not have a lump sum payment to offer your creditors. Alternatively, under a debt management program, all your creditors must be paid in full over a maximum of five years and only creditors who agree to participate are bound by the agreement. Creditors cannot be forced to participate in this type of arrangement and collection activity will only stop if the creditor agrees to participate.

The settlement company or individual has no legislative power to prevent collection activity and does not have any further negotiating power than you do as an individual. Those companies and individuals cannot use the relief provided by the Bankruptcy and Insolvency Act or help you file a bankruptcy or a proposal; only a Licensed Insolvency Trustee may help you do this.

Alternatives to Debt Management Programs, Debt Settlement Programs, and Credit Counselling Companies:

Under the Bankruptcy and Insolvency Act, filing a consumer proposal can provide relief from the struggle to pay all of your debts because it creates a new legal contract between you and your creditors. Filing a consumer proposal will also stop the interest on your debts, provide you with an extension of time to pay the debt, and may allow you to compromise the amount of debt you owe. Once accepted, a consumer proposal is binding on all of your unsecured creditors, and you make one monthly payment to the Licensed Insolvency Trustee. In this way, a consumer proposal can help alleviate your financial stress and frustrating budgeting issues.

Under the Bankruptcy and Insolvency Act, a bankruptcy filing can also provide you with relief from the struggle to pay all of your debts because it immediately terminates the obligation to pay most creditors.

As an alternative to struggling with debt settlement companies, credit counselling companies, or individuals promising to reduce your debt, a Licensed Insolvency Trustee will apply experience and knowledge of the Bankruptcy and Insolvency Act to assess your situation and provide you with options to begin a fresh start. If you are unsure how to move forward and struggling with deciding whether credit counselling is right for you, or if you have been turned down for a credit counselling program or debt management program, call us today. Our associates will listen to you, review options with you, and explain to you how we can help you get out from under the burden of debt.

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