Today, we’ll look at credit counselling and debt management plans as one of your debt-relief choices in greater detail. Credit counselling offers advice on consumer credit, money management, debt management, and budgeting to customers. The purpose of most credit counselling is to assist a debtor in avoiding bankruptcy if they are having trouble repaying their debts.

What exactly is Credit Counselling?

Credit counselling is known as the way of teaching people better money and debt management skills, as well as receiving assistance with personal budgeting and dealing with consumer credit issues. The word ‘credit counselling’ is now commonly used as a softer, less frightening moniker for the service they actually provide — a debt management plan.

Who is eligible for Credit Counselling?

A debt management plan is simply a debt payback plan set up with the help of a credit counsellor. It’s only one debt solution for people who are drowning in credit card debt. In a debt management plan, you can combine all of your unsecured debt, such as credit cards, lines of credit, unsecured loans, and past-due utility bills, into a single monthly payment to a credit counselling business.

What effect Credit Counselling will have on your credit?

Many consumers are surprised to hear that credit counselling affects their credit in the same way that a consumer proposal does.

On your credit report, a debt management plan will appear as a R7. A notification that you are in a scheduled repayment plan will appear at the bottom of your credit report, and it will stay there for 2-3 years after the program is completed, depending on the credit bureau. Each debt included in your plan will have a notice indicating that it is part of a set payback timeline. Debts will be removed from your credit report 6-7 years after the last activity date.

When you should think about other Debt-Relief solutions?

You must be able to afford to repay your debts in full plus fees on top of your monthly debt payments to be eligible for a debt management plan. If you think that you cannot pay off your Debt Management Plan then you must look at the other debt relief options like Debt Consolidation, Debt management, Debt settlement, Consumer proposal and Bankruptcy.

Bottom Line

There are many programs that can help Canadians get out of debt, including credit counselling. Each option has their place. It is important to choose the program that works best for you whether that is debt consolidation, a debt management plan, consumer proposal or bankruptcy. To know more about which option is best for you, contact us at [email protected]

Disclaimer: is a debt consultancy service, we are not an authorized blogsite and are only advisors providing you with the tools and information to help you get out of debt.