If you have debt that you need help consolidating, the best person to talk to is a debt counsellor. Debt counsellors also can be known as credit counsellors, the main objective of credit or debt counsellors is to provide personal and confidential money management advice, offer guidance on how to improve/repair your credit score and help individuals repay and recover from their debt.
But how do debt counsellors achieve this? The process that debt counsellors follow is pretty simple on the surface so let’s take an in-depth look at how debt counselling works.
The 3-Step Process
Generally speaking, there are usually three steps that a debt counsellor will do in their daily workload. The main purpose of all three steps is to help alleviate, negotiate and resolve your owed debt to the creditors.
Some of the duties debt counsellors do can include the following:
- Meeting with clients to learn about their overall financial situation
- Examining AI owed debt and income sources
- Reviewing clients’ debt records to identify all creditors and interest
- Helping clients create and set monthly budgets
- Exploring the pros and cons of various alternatives
- Helping clients prioritize their debt loads and create debt repayment plans
- Negotiating with creditors and courts on their clients’ behalf
- Providing education and resources on personal or family finances, including budgeting habits and financial literacy skills
Step One; The free, initial consultation with a debt counsellor
The first step most debt counsellors will take is to have a one-on-one meeting with their prospective clients. Most debt counselling services in Canada offer free complimentary first consultations. A trained debt counsellor will begin reviewing all your debts, credit and your income to get a full understanding of your debt. This will also help them create a feasible and functional budget to help you achieve your goal of finding a debt solution that works for your particular situation.
This first consultation can range in time, but during this consultation, the counsellor will explain and help you understand the range of solutions available to you. The kinds of debt solutions that can be presented to you can range from consolidation loans to consumer proposals.
Other alternatives can include:
- Consolidation loans
- Debt management plans
- Debt settlement
- Consumer proposals
At the end of your first consultation, the debt counsellor will recommend the best solution in their opinion based on the unique factors of your financial situation.
Step Two: Enrolling in a debt management program or alternative solution
A debt management plan is a debt solution designed to help people who can afford to repay the debts that they owe, but who cannot do it on their own or all at once. Depending on your credit score and situation, certain people may not be able to qualify for a debt consolidation loan. Additionally, some individuals prefer to avoid severely damaging their credit which is associated with solutions like debt settlement, consumer proposals or bankruptcy.
Your debt counsellor will help advise you on which solution would work best for you and your debt. Debt counsellors have extensive experience in handling various types of debt and which option will best suit your specific situation. They will take into consideration things like your income, lines of credit, total amassed debt, and any extraneous factors and then make an appeal to negotiate with your creditors on your behalf. Now, whether your creditor accepts this proposal or not is still up to them.
Step Three: Repaying your debt and working towards financial freedom
After your debt counsellor helps you with a debt solution plan, all that’s really left to do is follow through with the repayment plan you have chosen. Depending on the option you go with will dictate how long you’ll be making repayment, on some debt repayment plans you can expect to make payments from 24-60 months. Your debt counsellor will work with creditors, banks, lenders or any other collection agencies to help get them back on your side and support your payment plan.
Debt counsellors play a major role in their clients’ lives and in how they make strides towards financial freedom. Not only can debt counsellors help you consolidate and make a plan moving forward with your debt, but they can also help with education by providing resources on personal or family finances, including budgeting habits and financial literacy skills.
If you have debt you need help paying or just have some questions about how to be more financially responsible, the best person to speak to is a professional debt counsellor. Their work is centred around being a knowledgeable, reliable and trustworthy confidant for those who have found themselves in a financial pickle.