Economies worldwide and especially industrialized Western economies have experienced one of the worst tailspins since the Great Depression. Signs of an economic recovery are starting to appear but as this recovery takes hold, many consumers are finding themselves in serious financial straits. For them the situation is dire. The one thing they need is a constructive plan to manage their debt, and expert advice on managing their finances during the process.
When most of us think of debt solutions, our minds turn to Calgary bankruptcy or Calgary credit counseling. The airwaves and other advertising venues are crammed with pitches for bankruptcy assistance as well as credit counseling services.
No one wants to go through the pain of personal bankruptcy or the stigma that is attached to it. Personal bankruptcy can affect you for years. Agencies that specialize in credit counseling are often unaware of another option that is available to their clients. Due to a lack of publicity, few know of it and even fewer credit counselors offer it as an effective alternative for their clients to implement. A good credit counselor will understand this option and will educate clients on how to utilize the option of a Consumer Proposal. Its use and benefits are discussed below.
Agencies that offer credit counseling are comprised of ones that are for profit as well as ones that are non-profit. Both types of agencies will charge a fee for their services. You can expect them to formulate a Debt Management Plan that meets with your approval. They will then present the plan to your creditors. This will not include creditors that have secured their loan. These usually include home mortgages and loans on an automobile.
The idea behind the plan is fairly simple. The credit counselor gets your creditors to agree to lower their interest rates and waive late fees you might have acquired in exchange for a managed repayment schedule. Your credit accounts are closed and you will pay a single, much lower, monthly payment directly to the counseling service who in turn pays the creditors.
It’s important to understand that you must qualify for credit counseling. The amount of debt you have will be a determining factor in whether or not you qualify. A credit counseling service will be able to advise you on whether or not your debts are within the qualifying ranges. It’s important to know and understand the differences in a Consumer Proposal and a Debt Management Plan, before calling the counseling service.
A Debt Management Plan will not decrease the total amount of debt that is owed. It simply makes the payment schedule more manageable by restructuring it. For example, if your total unsecured debt is $30,000, then you will be remitting the whole amount, through a manageable repayment plan, as well as any fees owed to the credit counseling service.
With a Consumer Proposal, you can actually negotiate a reduction in the total amount you owe, reducing that $30,000 in debt to $15,000 and perhaps lower. In addition, Consumer Proposals afford legal protection unavailable with a DMP. If your wages are already under garnishment the law specifies it must stop under a Consumer Proposal while cessation of garnishment under a DMP is at the voluntary discretion of the creditor.
Since a Consumer Proposal is a binding legal agreement the government requires consumers to secure the services of a licensed professional bankruptcy trustee to file one. Unfortunately, some consumers who are aware of the existence of bankruptcy trustees avoid talking to them, thinking they only handle bankruptcies.
In fact, they are highly trained professional debt advisors who can help you evaluate your current financial situation and walk you through all of the available debt solution options, including both Debt Management Plans and Consumer Proposals. The initial consultation is free so why not do yourself a favor and give one a call. You have nothing to lose but a little time and everything to gain.