Credit Counseling Canada

Information on the best credit counseling agencies or companies in North America.

Are you looking for a credit counseling company? To start with, learn what credit counseling is all about.

Credit counseling, which is also known as debt counseling, is a course of action to educate the consumers on how not to incur debts which cannot be paid.

An effective debt management plan and budget is established and forms part of this educational process. However, credit counseling creates a carefully designed method of debt relief more than providing credit education through the debt management plan.

What Is A Debt Management Plan?

One facet of credit counseling involves discussing an issue with the creditors to form a debt management plan (DMP) for a client. The debt management plan provides guidelines so the debtors to enable him to repay any obligations by designing a repayment plan acceptable to the creditor.

The debt management plan is established by credit counselors and includes a package of reduced payments and fees as well as scaled down interest rates to the client. The reduced or diminished payments or interest offered to the consumers are dictated by the creditors.

Benefits of Credit Counseling

A common benefit of the debt management program is the combining of the monthly dues to a single monthly payment after closing the account of the customer and after assigning restrictions to the accounts which includes imposing future charges.

The debtor will be proposed a single payment which is usually lower than the combined individual payments that have been paid. This payment came about since credit card banks accept a reduced monthly payment plan from the customer covered by the debt management program than when the customer was paying the account by himself or herself. Payments may be reduced to a total of 50 percent while reductions are commonly pegged at 10 to 20 percent.

Some of the leeway provided by the credit card banks to ease and fast track payment of the consumer during the debt management program is to lower the annual percentage rates to 5 to 10 percent while a few of this banks get rid of interest altogether. The reduction in interest allows the counseling agencies to declare that their customers are to be debt free in a few years or in a period of 3 to 6 years rather than after 20 years.

Another benefit from this debt restructuring scheme and offered by the credit counseling companies is the process of making the delinquent accounts current. The credit account curing process usually happens after the client does a series of on-time payments under the guidelines of the debt management program which is considered as a show of good faith and commitment to stick with the payment program.

A payment due each month would be considered the negotiated monthly payment and the account statement as current to the credit institutions. In this case, the client is given with a fresh start and an opportunity to build a positive credit history. However, re-aging an account will just reset the time on a limitation, giving debt collectors more time to file a suit against you.

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