Who Gets Credit Counseling? - Walletpop Canada

You might be surprised by this but people from virtually every walk of life have been known to get credit counseling help.

It seems everyone out there is working to rack their debt up to record levels lately. With that development, we're also starting to see a boom in the number of debt settlement companies hanging out a shingle in an effort to attract new customers.

Those working in credit counselor positions say their service is primarily about financial rehabilitation, not the quick fix being promoted by a lot of new debt settlement companies operating in Canada. In reality, the "solutions" promoted by debt settlement organizations, often require you to push your accounts into default before settling. The process isn't a quick one and, arguably, it isn't much of a fix either.

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At the same time, some debt settlement companies will argue that non-profit credit counseling organizations are supported by charitable contributions from creditors. Ask questions (ask a lot of questions ? we have a few good ones for you here) before signing on with any company, to ensure that the help you get is aboveboard.

As mentioned earlier, those who seek the help of credit counselors come from virtually all age and wage brackets, and carry with them some widely variable debt loads.

"We do see people who mismanage their money, but mostly they come to us because of a life event. That can happen to anyone," says William Moores, counselor certification program manager at the Canadian Association of Credit Counselling Services. Job loss, medical issues and family separation are just a few typical events that can send people into a debt crisis position.

"We get a lot of people, from students with debt overload, to seniors and those who've left the workforce, along with people who have been right-sized, downsized and outsized, and families who've been living with a double income debt load who are now trying to manage that on one income or no income at all. It really is a broad spectrum," says Moores.

Although some individuals come in with well over $100,000 in debt and others come with virtually no debt at all, he says the average debt load reported in 2010, rang in around $30,000.

Laurie Campbell, executive director at Credit Canada says her agency gets client referrals from credit agencies, bankruptcy trustees and even from community organizations. Those who come to her are sometimes students, those on social assistance, others with six figure incomes, "young people, the elderly and everyone else in between."

She points out, though, that people need to come to the programs willingly, on their own. "A mother can't phone us about her son's debt problem, he needs to call or come in himself," she says. For those who do, the organization conducts full money management sessions, on the phone or in person, where a counselor will review assets, debts, budgeting and how the client is managing their money overall.

"People may have a debt but they just need to start dealing with their budget in a better manner ? if they budgeted more appropriately, they could resolve their situation. If they sold an asset or gave up a car they can't afford. They may be house poor. Or they might have money in a savings vehicle while they carry a huge debt at 19 per cent interest on the other side," she says. "We look at ways to help them manage better."

Related:
FCAC Issues Consumer Alert on Debt Reduction Companies
The Degrees of Insolvency
What Is Debt Settlement?
Debt Settlement or Credit Counseling?
Debt Settlement, Counseling and Your Credit Rating

Kate McCaffery is a freelance writer in Toronto, Ontario. Visit mccaffery.ca/kate2.0/ for more information.

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Source: http://www.walletpop.ca/blog/2012/02/05/who-gets-credit-counseling/

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