Consumer Credit Counseling – How to Shop for the Right Credit Counselor

Posted by: Krista McDonald on 12/26/2010

When it comes to getting professional help to deal with mounting debt, many Canadians first think of credit counselors.  If you’ve done some searching on the Internet, you may have run across the results of a study on the counseling industry done by the Financial Consumer Agency of Canada.  The study cautions Canadians to “shop around” when looking for consumer credit counseling.

The most obvious issue when shopping is cost.  There is a wide range of fees and commissions charged, even among non-profit credit counselors.  In addition, there are differences in timing of when fees are paid.  Finally, what the counselor will do for you needs to be spelled out in a contractual arrangement.  Consumers need to know what to do with collection letters they continue to get and what the credit counseling agency will do to help them with future collection attempts.

The one issue you will rarely find discussed on the net is your own mental state as you interview potential counselors.  Desperate people don’t always hear what they are told.  Some Canadians are surprised to find themselves facing wage garnishments after they have signed up for a credit counseling debt management plan.  When they check the fine print of their contract, they learn they were warned the debt management plan did not protect them from legal action.  But unfortunately they were too stressed to understand the warning. 

The best thing you can to when shopping around for consumer credit counseling is to allow yourself enough time to talk to several.  In addition, ask a trusted friend or relative to review what you learn about the different counselors and what they propose to do for you.  An objective opinion is always a help and for anyone whose judgment may be clouded by stress and fear, it is a must.