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credit counselling vs. proposal

When/ why would you choose credit counselling vs. consumer proposal? Thanks,

Posted from: British Columbia

One Response to “credit counselling vs. proposal”

A licensed trustee said...

Credit counselling is designed for people that can afford to repay 100% of their debt, but need relief from the interest. Credit counselling is usually an alternative to a consolidation loans, not a consumer proposal.

Consumer proposals are designed for people that can only afford to repay a portion of their debt. Consumer proposals are ususally an alternatve to filing bankruptcy.

So, if your budget shows you can afford to repay the debt in full go for credit counselling. If you can’t repay the debt in full you should be thinking of a consumer proposal.

This will muddy the waters – be careful who you deal with for credit counselling. There are a host of “for profit” debt consulting companies out there that offer debt settlement programs. Many are scam artists, or worse, they will charge you a fee and then refer you to a trustee to file a consumer proposal. BEFORE you commit to a credit counselling program check into the agency – they should be a registered not for profit and they should be doing all of the work themselves. If they are referring you elsewhere then you shouldn’t pay them a fee…. By some estimates, 1 out of every 4 people in Toronto are now falling victim to these companies. BE CAREFUL.