If you are even considering credit counselling, then we encourage you to explore the option further. Choosing to reduce your debt with the help of a counsellor is a huge, and positive, step towards gaining financial stability. However, it is also a very serious decision that should not be taken lightly.

Credit counselling can improve many aspects of your life. It can help you get out of debt faster and improve your credit. And there are many agencies out there that would love to quickly enroll you in their debt management program. However, not all agencies are created equal and not all agencies are truly looking out for your best interest. As with most things in life, if it sounds too good to be true, it probably is.

That's why we're going to show you :

What to look for in a credit counselling agency.
What questions you should ask.
And warning signs that you may not be dealing with an ethical practice.

So what should you look for first while considering credit counselling ? Well, at a bare minimum, you should look for a non-profit, charitable credit counselling agency that can provide personalized service, coupled with sound financial education to ensure a long-term solution to eliminating your debt.

Other important factors include :

Member of Credit Counselling Canada ("CCC") or Ontario Association of Credit Counselling Services ("OACCS")

One of the first things to look for is that the agency you’re dealing with is a member in good standing with Credit Counselling Canada or the Ontario Association of Credit Counselling Services. CCC is the only national association of non-profit and government credit counselling agencies in Canada. Member agencies of CCC are supported by voluntary contributions from various financial institutions and consumers. This is how these Credit Counselling Agencies are able to provide quality counselling services.

Trained & Experienced Counsellors

The credit counsellors you speak with should be highly trained and meet the high standards of CCC. This way you can be sure that your counsellor really knows what he or she is talking about. Also, make sure that your counsellor will not receive a bonus for enrolling you on their program. That’s a sure sign of a salesperson, not a credit counsellor! Once you have found a credit counselling organization that meets these requirements, there are still a handful of questions that you should be asking in order to find the absolute best agency for your needs. Some of these questions should include:

What about costs ? Whether they request " fees " or " contributions ", they should be disclosed and should be reasonable. MAKE SURE – the agency is not planning to keep the first month's payment as their fee ! This is very unethical practice and can cause you to become further delinquent with your creditors.
What can you expect in the counselling process ? In the first place, did they ask you about your particular situation and tell you about some options or did they start " selling " a solution, such as a debt management plan to you without knowing anything about you? If so, thank them for their time and look elsewhere.
Ongoing Education ? The better agencies will provide various types of educational materials for you to take advantage of. As part of the non-profit charitable mission of credit counselling agencies, this education should always be provided to you at no cost.
Where Will Your Money Be Held ? Your money should be held in a separate Trust Account. This will ensure that the agency can’t use your money for anything other than paying your creditors.
Who Are the Agency's Board Members ? They should be independent, experienced professionals with diverse backgrounds that are not also employees of the agency. That way, you can be more assured that the agency is following ethical business practices.

Make sure the contract includes :

Disclosure of the amount of your fee or contribution
Description of the services to be provided
An estimate of the payoff schedule for the debts
Disclosure of the termination provisions of the agreement
Options for resolution of disputes

Finally, we would like you to be aware of a few warning signs to watch for, because if you notice any of them – there’s a good chance the agency you’re dealing with is not the credit counselling agency for you.

The following are some red flags that you should look for when interviewing an agency :

Unrealistic Low Monthly Payments
Money Back Offers
Loan Programs
If the promises being made seem like they’re too good to be true, they probably are. Beware.

Aggressive Sales Tactics

Aggressive sales tactics, such as unsolicited phone calls or e-mails. You should never feel pressured into signing up with an agency. As we mentioned before, credit counselling is not for everyone and is a serious commitment that requires serious consideration, not high-pressure sales.

Keeping Your First Payment as a Fee

Some agencies might try to take your first month’s payment as a fee or contribution. This is completely unethical and a major red flag to look out for. It is extremely important that your first payment, and every payment thereafter, go towards paying down your debt.

Beware of Debt Settlement Companies

Debt settlement companies typically hold onto your monthly payments until they have a designated amount accumulated, then they send a payment to your creditors. This can cause your creditors to continue showing you as delinquent, continue charging you late fees and continue calling you at home. These are all the things you are trying to avoid !