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December 2013 - Options for solving financial problem Part V – Credit Counselling

Options for solving financial problem Part V – Credit Counselling

☳ by Adam Aspilla

So far Debt Consolidation, Mortgage Refinancing, (equity take out), Liquidation of Assets, Debt Settlement were discussed in the last four issues of this paper. The fifth is called Credit Counselling. You may visit www.debtcliniccanada.ca to read the four options above mentioned.


Credit Counselling is simply a proposal to your creditors whereby you pay in full, the principal amount only (no interest) of your outstanding debts. Said proposal is to be prepared by your credit counsellor.

This option only includes unsecure debts. Meaning those debts without collateral or security. Unsecure debts are granted based purely on good credit rating, sufficient, and stable income of an applicant, like: credit cards and unsecure line of credits.


Furthermore, in a credit counselling, you have to include all your unsecure debts. Otherwise, your creditors would reject your proposal as it is considered discrimination to those creditors included in the credit counselling, where you do not pay interest, while those creditors not included in credit counselling, you will pay not only the principal but interest as well.


In addition, in a credit counselling, you are to pay the outstanding principal balance on equal monthly installments of not more than sixty months. Thus, you have to demonstrate that your monthly disposable income would be enough to pay your monthly installments, for in the event you default on your payments, your approved proposal to pay just the principal would be cancelled. As a consequence, you will be back to square one - that is you will be required to pay the principal and the interest.


Moreover, if you have assets like: equity on your house or investments, you could not qualify for credit counselling, as your creditors would tell you to liquidate those assets to pay off your debts.

If Credit Counselling is not appropriate on your financial situation you may consider Debt Consolidation, Mortgage Refinancing (equity take out), Liquidation of Assets, Debt Settlement as discussed in previous issues. Furthermore, your other options are Consumer Proposal, and Bankruptcy that the writer will discuss in succeeding issues.



Adam Aspilla is a Senior Financial Counselor of the Debt Clinic of Canada Inc. and the author of the book, You Can Negotiate All Your Debts. He also writes a biweekly column, “What Matters In Life” in “Taliba Newspaper. For free initial, professional and confidential consultation, please call 905-306-7572.