Credit Cards For Fair Credit

Worldwide, economies have experience an economic tailspin the likes of which most people have only heard stories about from parents. The good news is that signs of an economic recovery on the horizon are everywhere. Unfortunately many people have found themselves burdened with debt and are in need of concrete ways to manage their debt. For many the situation is critical and they need sound financial advice and credit counseling from an expert. 

Many people think in terms of  bankruptcy in Calgary as a solution or they may seek out a credit counseling expert to help them resolve their problems. Daily they are bombarded with television and radio commercials promoting assistance with filing for bankruptcy, as well as offers of credit counseling, as a way to help them manage their debt load.

The idea of declaring personal bankruptcy is more than some people can bear, so they turn to credit counseling agencies, unaware there is yet another potential solution that gets little publicity – the Consumer Proposal.  Let’s walk through a brief overview of what’s involved in both a credit counseling service and a Consumer Proposal.

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.

A Consumer Proposal is a concept whereby a credit counselor approaches your creditors with the intention of getting them to lower the percentage of interest you currently pay and waive any late fees that may have been added on to your account. In return you agree to a payment plan that is more manageable. You will make these payments to the credit counseling service and they will pay your creditors. All credit accounts that you currently have will be closed.

Some debt may be so large that it will restrict you from qualifying for credit counseling. There are differences that you need to understand when it comes to a Debt Management Plan or a Consumer Proposal. It's important to know the differences before you call a credit counseling service.

It's important to understand that under a Debt Management Plan you will be repaying the entire amount owed to creditors of unsecured debt. The benefit to you is seen in payments that are now more manageable. Added to the total debt owed will be any fees that are 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.

A bankruptcy trustee can handle a Consumer Proposal. They must be licensed as this is a legal agreement that is binding in a court of law. The government requires that consumers use their services in order to file a Consumer Proposal. Consumers need to understand that a bankruptcy trustee is experienced in handling many aspects of debt management.

Bankruptcy trustees are trained professionals and are skilled in debt management. They will evaluate your finances and explain the many options that are available to you. They fully understand and know how to implement Consumer Proposals and Debt Management Plans. Most offer a free consultation and it is in your best interests to consult with one in order to proceed with a plan that best suits your needs.

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