Other FAQ's

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Is Credit Counselling the best option for me?

The answer, of course, is “Maybe.” Each person’s circumstances are unique. There is certainly no universal answer. That is why it is important for you to have a confidential conversation with a non-judgemental counsellor who is aware of the options that are available to you, and who can explain to you the probable consequences – whether positive or negative of following various courses of action.

We confess to being a little biased here. Our specialty is basically an extension of what you could possibly do yourself if you have lots of courage, discipline and determination and are willing to make the effort to study the rules and standards that apply. We have found it to be a very effective program that provides an excellent opportunity for most people overwhelmed with serious unsecured debt to recover their financial health. It also builds solid habits that lead to good money management once the program has been completed.

If you wanted to, you could examine your budget and determine what your real income and reasonable expenses are so that you could calculate a monthly payment total that you could afford to pay your creditors while still maintaining a decent standard of living without using further credit.

Then you could communicate with each of your creditors and offer a debt repayment plan, requesting that they reduce or eliminate interest charges and permit you to pay off your outstanding balances over an extended period. They will require that you surrender your credit cards and provide them with a lot of information – like a detailed budget, the reasons for your failure to make regular payments, your assurances that all of your creditors will receive a similar offer, and some form of guarantee that you will stick to the plan. If you have been making empty promises for some time you may have trouble getting them to believe you.

Assuming that you are successful to this point, you still have to carry through. If you have been in the habit of missing payments, that isn’t going to work for long in this new deal that you will have committed yourself to, so don’t do it unless you are sure you can stick to it. If you start out and quit along the way, you will only make life a lot worse for yourself.

There are a few little kinks that make this process not quite as “un-difficult” as it might seem. You are not likely to achieve the same results in talking with your creditors as our experienced negotiators will obtain. If your accounts have been given to a third party collection agency you will definitely find them to be less cooperative than the original creditors. You may even have trouble finding who you really owe the money to in cases where accounts have been “sold” to private credit recovery firms. It is also quite possible to trip on explosive financial “grenades” if you happen to re-activate an old debt that has passed a statutory age limitation.

If you are afraid to talk to the creditors, or if you find that the conversations that you do have tend to be way-too-one-sided (either they only make unreasonable demands, or you only continue to tell them that you cannot pay) you NEED to talk to a counsellor. Life is too short to spend years in credit hell. If you don’t do something to fix it, it will not go away. You don’t want the other option either – where they finally lose patience and force you into bankruptcy.

Call a counsellor now at 1-888-591-9443 or fill out the online application.

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Why would I entrust my credit future to you instead of the other guys?

If you spend a little time browsing on-line or looking through the Yellow Pages, you will find many organizations that will offer to fix your credit problems. If you look carefully at what some of the worst of these scam artists claim to be able to do for you, you will be amazed at the risks that you would encounter if you were to engage their services. For example, you will find “Credit Repair” specialists who will resort to incredible means to make it appear that your credit rating is in good standing. Some will write fictional loans or mortgages in your name and report a solid history of flawless repayment in order to improve your score at the credit bureaus. If you ever get caught applying for a loan with one of these guys helping you out, you will be guilty of fraud – much worse than a bad credit score.

Many are not that bad, but they do little good. The credit bureaus are very good at what they do, and if they do have an occasional reporting error, you can certainly have those corrected yourself.

Beware of “wolves in sheep’s clothing”. Many trustees in bankruptcy masquerade as credit counsellors. They stand to make great gain at your expense when they convince you that bankruptcy is your best (or only) option. Many consumers are not aware that bankrupt persons pay good money (sometimes lots of it) to trustees in bankruptcy to go to work for their creditors in order to extract as much as they can from the bankrupt debtor to satisfy the demands of the creditors. Sounds kind of unfair to me!

Then there are the debt settlement people. They do indeed perform a valuable and worthwhile service to certain people who have stretched their credit too far. If a person is able to obtain borrowed funds from an equity mortgage or has received a windfall lump-sum-payment, that individual is in a good position to utilize the services of a debt settlement specialist. We would love to help you with one of these if you are in that position, and this is a totally legitimate area of business. However, there are others out there that do not display a whole lot of integrity when they accept money from the client and allow it to build up over time – typically many months or perhaps even years, before finally approaching the creditor to offer a lump-sum final payment of a fraction (maybe 50 percent or less) of the actual amount owing. I would suggest that it would not be a good idea to get involved with one of these plans.

Finally, there are other credit counselling organizations out there who advertise themselves as “not-for-profit” agencies. These are, for the most part, very helpful people who perform a service very similar to ours. However, they try to create the impression that, because they have a “not-for-profit” charter, they offer their service for free or at a reduced rate. This is, in our opinion, a serious misrepresentation of the facts. These organizations still charge the debtors who walk through their doors or engage their counsellors on the phone, a fee very similar to or perhaps higher than the fees that we charge. In addition, due to their legal status as a “charitable organization” they encourage “donations” and provide tax receipts. The most frequent “donors” are the very creditors that they are supposedly trying to negotiate favourable repayment plans with on behalf of the debtors. These “donations” or shall we call them “kick-backs” are unseen by the debtors, and typically are expected by the agency to be on the order of 15% of the money they are disbursing on behalf of the debtors. Kind of sounds like a conflict of interests to me. We do not expect, solicit, or accept ANY payments from the creditors. We work exclusively for our clients, the unfortunate individuals who for any number of reasons, find themselves over their heads in debt.

We think our experienced, friendly, non-judgmental counsellors should be your first choice in selecting someone to assist you in resolving your financial headaches. We believe in full disclosure of all fees and conditions, and assure you of the highest degree of integrity, confidentiality and professional conduct that can be found in this very sensitive industry. It would give us great pleasure to assist you. Please call our toll-free hot line today at 1-888-591-9443 or apply online.

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What happens to my credit rating if I get you to help me?

We do not obtain your credit report or submit information about you to the credit bureaus. Your creditors may, at their discretion, report your changed status when we have negotiated a plan with them. It is true that your credit score can take a hit when you enrol in credit counselling, but it is also true that it is the lenders – not the credit bureau that makes the decision as to whether or not to lend you money. An experienced lender will recognize that credit counselling can have a very positive effect on a person’s money management habits, showing that the individual, regardless of their past record, is now taking responsibility for their debts. The lender is very likely to view a notation that you are in credit counselling as a positive indication.

In our negotiation with the creditors we request that the loan be reported as “current” in addition to our request for elimination of interest charges. A delinquent (typically in excess of 120 days in arrears) credit card debt appears in your credit report as an “R9” which is about as bad as it can get short of having filed for bankruptcy. A delinquent revolving credit debt that has been included in a program for credit counselling will be reported as an “R7” which is a whole lot nicer than an R9.

In the long run, if your credit score is already in serious trouble when you come to us, whether our activity will result in a moderately higher or lower credit score is largely meaningless. A minor improvement or decline in your score is unlikely to have any impact on lenders who “go by the book” in deciding whether to lend you money or not.

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Exactly what debts can you help me with?

Good question! I am glad you asked. Our primary focus is unsecured debt. This includes credit cards, personal loans, bank overdrafts, unsecured line-of-credit loans, merchant retail credit and so on. Depending on the lender, we may be able to work with personal loans that are secured by electronics, home furniture and appliances. In many cases, we will take on medical and dental bills, utility bills, cell phone bills, unpaid insurance claims, and so on. Under the right circumstances, we will help you deal with past due student loans, EI recovery claims, and even the mother of all unsecured creditors, the Canada Revenue Agency.

Under the right circumstances, we will even help you repay family members or friends for past acts of generosity. You might want to be careful with this one though. You may not want to subject people you care about to the small payments and extended payout periods that we negotiate with consumer creditors, and we have to be careful that we treat all creditors fairly.

Although we need to know about them, it is very rare that we try to work with car loans or leases. Neither would we accept mortgages and lines of credit that are secured by equity in real estate.

The key here is whether or not the creditor is likely to be able to recover any reasonable amount of the debt you owe by having the ability to take and sell something of yours that has value, or by subjecting you to severe consequences if you fail to pay (eg: Canada Revenue Agency). If there is not a high probability that the creditor would be able to extract enough value from you by either seizing your property or suing you and obtaining a court judgement, we are likely going to be able to get them to agree to at least dropping interest charges and extending payback periods.

Since bankruptcy is your next probable action in the event that you do not eliminate your debt some other way, and since your unsecured creditors are likely to get very little from a bankruptcy they are usually quite willing to work with us. Certain unsecured creditors like the CRA are protected through bankruptcy, so the taxes you owe, and most student loans would not go away in a bankruptcy. However, they are willing to work with us to help you make those payments, and will even let us extend the length of payout terms, so we do take on these debts.

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Can you give me an example of how this works using real numbers?

Sure. Everybody’s situation is different, but it is not uncommon for people that come to us to be carrying unsecured debt loads on the order of $20,000. That seems to be a point where a typical young family suddenly becomes aware that they are going the wrong direction. Often something outside of your control happens – a new baby, a car accident, an injury, a change in jobs or whatever. You start missing occasional payments, then you go over limit on a couple of credit cards.

By now you have used up all your credit limits and have bank accounts where the balance no longer emerges above zero but seems to be stuck at the bottom of an overdraft hole. The creditors start calling. You try desperately to catch up, but you find that more and more often there is month left over at the end of the money. You turn to your bank that has always been willing to offer more and more credit when it wasn’t really needed (remember that big-screen TV or the new car you bought a few months ago?) but the lending officer acts like he doesn’t even know you any more. You notice that the interest rates on your cards have increased. No longer at 9% or 18%, many go right to 29% ! They add over-limit and missed payment penalties, and you are ready to give up but you don’t know how! In desperation you visit a payday loans store. Payday comes and you can’t quite make your payment, so let them roll it over – oh well, its only another couple hundred bucks for two more weeks. Ouch!! Are you pinching yourself? Does this really happen?

Somehow you see our ad or google our website. We review your application and call you to make an appointment for a free consultation. You will tell us about all of your debts, every credit card, personal loan, overdue utility bills, student loans, car loans or leases, mortgages, bank overdrafts, overdue taxes, and so on. Then we will ask you about your net household income and dependents. Finally, you will tell us where all the money goes – your cost of living expenses – mortgage and loan payments, rent, taxes, condo fees, insurances, groceries, utilities, etc. and even your bad habits like smoking, going to Tim Horton’s, and so on.

We will examine your budget and help you work out a single payment that you can make every month without having to live like a hermit, which we will use to pay all of your unsecured creditors. Your budget – not the collectors’ demands, will determine the length of time that it will take you to get out of debt – maybe three, three and ½ , or four years.

Ok, I got carried away. Here are the numbers.

In this example, we will assume that all of your unsecured debts add up to $20,000 and you have been in trouble long enough for the creditors to add penalty charges and get your interest rates up to 25%. At that stage, you could stop using your cards altogether and if you have enough income, just pay their minimum balances. On that amount of debt, minimum payments (excluding the initial “make-up” payments to catch up on missed payments) will probably be about $700. If you continue to make only minimum payments (which reduce as the balances go down) it will take you over 300 months (that’s over 25 years!) to pay off your debt. You will pay out over $29,000 in interest in addition to your $20,000 of principal before this is done!

As an alternative, you might be able to keep on making $700 payments every month until the debt has been paid off. Even if you do that, and again, assuming that you will not use the cards, it will still take you 44 months to get rid of your debt, and you will pay almost $11,000 in interest (a total of $31,000).

On our plan, we will be successful with most of your creditors in negotiating a zero-interest agreement. If your budget can handle it, we would want you to pay between $450 and $500 per month. Your debts would be paid off after about 48 months, and you will have paid out a total of less than $25,000. If your budget allows you to pay more each month, of course your loans will be paid off even faster, and your total payment may be even less.

Having us working for you can save you many thousands of dollars. The sooner you get started, the easier it will be. Call our hot line now at 1-888-591-9443 or apply online.

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It sounds like you will make me cut up my credit cards. How can I live that way?

We might even offer to cut them up for you! Credit cards can be very useful when they are not abused. In the society we live in today, I have to admit that it is pretty hard to live without at least one credit card. You pretty much have to have one in order to book accommodation, make airline reservations, order anything off the internet, and so on. They can be great for record keeping and invaluable if you are a salesperson or running a business. In addition to that, they can help you to start rebuilding your credit, and give you yet another opportunity to learn how to handle credit properly.

We may be able to structure your repayment so that you can keep one low-limit credit card that you can use when you need it, and pay off every month to build your reputation with the credit bureaus. If not, there are companies that offer secured credit cards that look like the real thing, but you have to supply the creditor with a deposit – usually as large as the credit limit you want to carry. You rebuild your credit by paying it off all the time. Eventually, the creditor will return all or part of your deposit and increase your credit limit so that by the time you have learned how to use it wisely, you will have a real credit card again, and can continue with your life.

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What happens if my circumstances change? Can I cancel the program?

Sure, but why would you want to cancel? I can’t imagine anyone who would want to stop a program that was on track to save them thousands of dollars. However, I know that people just cannot control the world they are living in, and things do change. If you get a surprise promotion and find yourself able to clean up your credit mess faster than your original budget permitted, you can make extra payments or increase your payment amounts at any time. If you run into even harder times, and have to skip a couple of payments, you will find that we are not like those hard-nosed collectors you have been dealing with – we will do our best to make arrangements for you so that you can stay with the program.

Just the same, we would not want you to start a program like this if you did not intend to carry through. Creditors can be very vindictive, and if you just drop out of the program after they have made all their concessions to make it possible for you to get out of debt, they are very likely to reinstate their old policies with a vengeance. In all probability, they would put the interest rates back up to where they were before we started, reinstate all back interest that we had asked them to forego, and send the collectors after you with a determination to make life at least as miserable as it was before. Not recommended! Don’t start unless you intend to carry through.

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How do I qualify to have you build a program for me?

Usually, there is no serious effort needed to qualify – you’ve done all the hard work already by getting yourself in debt. However, this program just doesn’t work if you don’t have enough stable income to know that you can consistently meet the payment schedule necessary to pay off the debt. An occasional stumble is understandable, but when you hit a brick wall, there is not much we can do about it. On the other hand, if you have income that is much larger than should normally be needed to service your debt, we may have difficulty making your case with the creditors.

According to the Superintendent of Bankruptcy, a person would qualify for that service under much more comfortable circumstances than the majority of our clients enjoy. In the example that we used above of a program to pay off $20,000 in unsecured debt, the bankruptcy proponents would have you in court in a jiffy if you did not have at least $4000 per month in take-home pay while supporting a family of three. We can help you keep your assets, your pride, and your credit intact under much more limiting conditions than the bankruptcy trustees require – not that you would want to go there, of course.

Our compensation for providing these benefits to you is ultimately based on the size of your debt. Although we are reluctant to turn anyone away, we have found that it costs us money to go through the process for anyone who has less than $4000 in unsecured debts. We will judge each case where an applicant does not meet that criterion on an individual basis. Even if we cannot open a program for you, we would still be available to provide financial advice, and point you in another direction where help is likely to be found.

If you're ready, call 1-888-591-9443 or apply online.

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