Debt can be both helpful and devastating to your finances. When debt is handled responsibly, it can help you establish a credit history and boost your credit score. When you take on too much debt, however, it can eat away at your finances, destroy your credit, and even lead to bankruptcy.
If your credit has become unmanageable and you need help getting your finances under control, there are plenty of places you can turn to for financial help in Edmonton. One option is credit counseling.
Credit Counseling Basics
Credit counseling in Edmonton is an alternative to bankruptcy that helps make your debt more manageable. When you turn to a credit counseling agency for help, your credit counselor will sit down with you and review your finances. He or she will help you develop a debt management plan to pay down your debt. Additionally, you will also learn how to budget and avoid incurring additional debt.
Credit counseling and debt consolidation often go hand in hand. The credit counsellor works closely with your creditors to negotiate lower interest rates or, in some cases, settle your debts for a lower amount. After the credit counsellor develops a debt management plan, it must be approved by your creditors before you can begin making payments. Once it’s approved, you begin making payments to the credit counsellor, who will in turn, make payments to your creditors.
Avoiding Credit Counseling Scams
Unfortunately, most credit counseling agencies are unregulated and there are many unscrupulous companies that prey on people who are experiencing financial difficulties. Avoid falling victim for a scam by paying attention to the following warning signs:
Promises to repair credit instantly
Some disreputable companies claim to be able to repair your credit virtually overnight. This is impossible, as the process to build up your credit score can only be done gradually as you prove you can consistently pay your creditors on time.
Asks for payment before doing any work
Legally, the credit counseling service must actually provide services before charging you for them.
You are not informed of your legal rights
Oftentimes, credit counseling scams charge you to do work you can do yourself, such as dispute negative reports on your credit report or negotiate with creditors for a lower interest rate. Credit counseling agencies are required to inform you of this before charging for services you can do yourself for free.
Credit counseling in Edmonton can be a helpful way to take control of your finances and learn money management tips, provided you choose a reputable company. Licensed bankruptcy trustees can also provide credit counselling and are regulated by the Canadian government, held to the highest standards of practice.
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