Finding A Credible Credit Counselling Agency

If you are like many Islanders, there are times when you really wonder and stress about how you are ever going to pay off all your bills and be able to live debt free. You may dream of having a savings account and a retirement fund. You may have heard advertisements from companies promising to reduce your debt by 50 – 80%  if you just call and see if you qualify for their program.

Well – it is also likely that you have heard the saying – “If it sounds too good to be true, it probably is”.

There are different types of agencies who have the goal of helping you decrease your debt.   There are credit counselling agencies and debt settlement companies.  Some agencies are classified as ‘for profit’ and some are classified as ‘not for profit’; and those who are accredited versus those who are not. Some of the agencies are operating under questionable practices in attempts to get more and more clients on Debt Repayment Plans (DRP) or to “settle their debts with creditors”.   The truth is, these options are valid and helpful for people who really need it – however, qualifying either of these options requires a thorough assessment of your current financial situation and is much more than just adding up all your debt to see if you qualify.  The hidden small print from many of the agencies that are operating under questionable terms is that while they may work with your creditors to reduce your debt and/or your interest rates, they will charge you large monthly fees; require down payments and/or set-up fees; and insist that you stay on the program for an agreed upon period of time.

How to find a credible credit counselling agency:

Find a local agency that is both not for profit and fully accredited by looking in your phone book or searching on-line. Your local agencies are accredited by Credit Counselling Canada.

When you call to make an appointment:

• ask to have a face-to-face appointment with a credit counsellor.
• Verify that the organization is accredited.
• Verify that the organization is not for profit.

When you speak to a credit counsellor:

• He/she should be helping you develop a budget so you both can fully understand your financial situation; and any lifestyle changes that you can make to help you improve your financial situation
• He/she should be asking you about all your debts; assets; liabilities; and payment history – not just those related to credit card debt.
• He/she should give you more than one option for improving your financial situation. If a DRP is an option for you, he/she should encourage you to go home and think about all options prior to signing up for anything

If you choose to pursue a Debt Repayment Plan:

• Your credit counsellor should explain the consequences for you and your credit rating
• You should be given the option to make a lump sum payment to further reduce or eliminate your debt at any given time.
• Start up fees and monthly administration costs should be minimal, with the vast majority of your money going directly to your creditors.

And last, but not least: Never sign a contract without reading and understanding all the small print