First, congratulations on being wise enough to consider looking for credit counseling options available from a local Lethbridge counselor instead of enrolling in one of the many questionable credit counseling services you find advertised via the Internet.
Most reputable experts in debt solution issues will advise you to work with someone you can meet face to face and who has been doing business in your local area for a long time. What credit counseling options will you find at a Lethbridge Credit Counseling service?
First, the credit counselor will assess your current financial picture. Although these initial sessions are generally free of charge, there really is no such thing as “free credit counseling” in that all credit counseling services, even not for profits, have to charge something for their services or they couldn’t continue to operate.
Second, based on how much you owe and how much you make as well as how much you own, the Credit Counselor will walk you through the options available to you. If your debt is not that large, they may be able to help you develop a strict budget where cutting expenses to the bone will allow you to get through your difficulties.
If you have equity in your home they may suggest a debt consolidation loan through your bank or other financial institution. If you have no significant assets or if your credit rating is already in tatters, they will suggest other debt consolidation options.
Third, if your income to debt ratio allows you to make single affordable monthly payments to pay off your total debt in 3 – 5 years, you can qualify for a Debt Management Plan. The Lethbridge Credit Counseling Service will manage the plan for you – for a fee of course – and inform your creditors to expect payment from them, not from you.
Fourth, if your debt load is too high to allow full repayment in the 3-5 year period, you might qualify for a Debt Settlement Plan, depending on your income. Here the Credit Counselor contacts your creditors and negotiates reductions in the principal you owe and the interest you are paying low enough to allow repayment of the reduced amount in the 3-5 year period.
Both Debt Management Plans and Debt Settlement Plans will negatively impact your credit rating, although a DMP will be less severe. However, their major disadvantage is not what they do to your credit score but the fact they offer no legal protection.
In both cases there is nothing to prevent a creditor from changing their minds and coming after you to collect what you owe. If you have assets you could well be sued.
Fifth, a reputable Credit Counselor will be aware of the possibility of asset sale and seizure and suggest another option – an Orderly Payment of Debts (OPD). This alternative involves petitioning the courts for a consolidation order, allowing you to pay back your debt in full with reduced interest over a 4 year period. Your assets and income will be fully protected from seizure and sale and wage garnishment. Alberta is one of only 4 Canadian Provinces that allow OPD’s (the others are Saskatchewan, Prince Edward Island, and Nova Scotia) and you must work with a not for profit Credit Counseling Service to get one.
In summary, a Lethbridge Credit Counseling Service can offer you help in creating a budget which might see you through your troubles. It may also be in your best interest to contact a Bankruptcy Trustee to discuss all options available to you.
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