Whatever way of settlement you choose between Debt Negotiations, Personal debt counseling vs. Consumer Proposal, there is always a bad impact on your credit score. It is because in all parts of Canada be it, Calgary, Alberta, Edmonton, or Lloydminster, all types of debt negotiations or settlement is written on the credit report under the R7 tag. They all affect the credit rating in the same way! In this guide, we have discussed all methods and which one will help in rebuilding your credit swiftly.
Informal Debt Negotiations:
When you try to negotiate and settle the debt based on some amateur debt coach’s advice, their bad credit help worsens your current situation making you fall into the trap of more debt. So, never fall in prey of such false companies. Although the Canadian government has imposed strict rules to get such fraud companies and individuals out of business, there are still many that are operating by charging a fee for providing referrals to Insolvency trustee.
Credit counseling plans
Different credit counseling agencies in Canada offer debt management plans where you pool all your debt together and then make a single payment to the credit counselor. Remember, these plans will not settle the debts. You have to repay your debt with this program. No doubt, you can block the future interest with the plan but you have to replay the whole debt amount in 4-5 years.
So, choose personal credit counseling services only when you have the ability to pay the whole debt amount. As you have to clear the whole amount, the installment amount per month will be higher than the consumer proposal which may limit your ways to build your savings.
Even if you are using a credit counseling program, your credit report will be impacted with R7 tag which will further stay on it for the next 3 years.
Well, if you don’t have the ability to pay the whole debt, then you can opt for a consumer proposal where you have to repay only one-third of the whole debt you owe. As the amount is low in consumer proposals, the monthly installment will be relatively less as compared to debt consolidation loan and credit counseling programs.
Even if you are using a consumer proposal, your credit report will be impacted with the R7 tag similar to the credit counseling program. Only licensed insolvency trustees can administer your consumer proposal so make sure that you are not dealing with a debt consultant when opting for a consumer proposal.
By now, you must have learned about all the different methods to get bad credit help and rebuild your financial status again. Credit720 can be your partner in improving your credit score with smart strategies and offer best personal debt counseling services to go for better options like debt consolidation loan in all parts of Canada such as Alberta, Edmonton, Lloydminster and Calgary.