Credit Counselling or Consumer Proposal? Many Canadians find themselves struggling to pay off debt, and are asking this question. High interest rates on credit cards sometimes make it difficult to get ahead if you can only afford to make minimum payments. With all of the advertising saying this company or that company can help you with your debt, who should you choose?

Non-Profit Credit Counselling

A non-profit credit counselling agency offers what is called a debt management program (DMP), also known as a debt consolidation program. The agency will contact your creditors and negotiate a 0% interest payment, so that you’ll only have to pay back the principle. There is a small fee to use this service, which is a small percentage of the payments you make. But it’s much less expensive than the interest you’d be paying.

Consumer Proposal

A consumer proposal can only be administered by a Licenced Insolvency Trustee, formerly known as a Trustee in Bankruptcy and Insolvency. The Trustee represents your creditors, and tries to get most of the money you back back to them you owe back to them. How much does a consumer proposal cost? Usually around $1500, which is tough enough when you are already dealing with unmanageable debts.

After they put together your proposal, your creditors have to approve it. If your proposal fails, your only option could be bankruptcy. One of the main disadvantages of consumer proposals is it’s not private. Your name is permanently added to a database with the Office of the Superintendent of Bankruptcy. This might affect your ability to rent an apartment or get a job.

The best place to start if you need help is with a non profit credit counselling agency, like Credit Canada Debt Solutions. For over 50 years, they have helped people deal with their debts and learn how to better manage their money. Your accredited credit counsellor will provide you with all the options to eliminate your debt, including a debt management program DMP or consumer proposal. To understand all your options for free, call them today at 1-800-267-2272.