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Much of the Western industrialized world has gone into an economic tailspin from which we are only beginning to recover. As a consequence, more and more consumers find themselves in dire financial straits and are looking for ways to help manage their debt load.

Calgary Credit counselors and filing for bankruptcy are two of the most common options that people tend to think of when it comes to unmanageable debt. Radio and television commercials are filled with companies offering assistance with filing for bankruptcy. There's also been a significant increase in commercials that offer the services of a professional credit counselor.

No one wants to go through the pain of personal bankruptcy or the stigma that is attached to it. Personal bankruptcy can affect you for years. Agencies that specialize in credit counseling are often unaware of another option that is available to their clients. Due to a lack of publicity, few know of it and even fewer credit counselors offer it as an effective alternative for their clients to implement. A good credit counselor will understand this option and will educate clients on how to utilize the option of a Consumer Proposal. Its use and benefits are discussed below.

Agencies that offer credit counseling are comprised of ones that are for profit as well as ones that are non-profit. Both types of agencies will charge a fee for their services. You can expect them to formulate a Debt Management Plan that meets with your approval. They will then present the plan to your creditors. This will not include creditors that have secured their loan. These usually include home mortgages and loans on an automobile.

A Consumer Proposal is a concept whereby a credit counselor approaches your creditors with the intention of getting them to lower the percentage of interest you currently pay and waive any late fees that may have been added on to your account. In return you agree to a payment plan that is more manageable. You will make these payments to the credit counseling service and they will pay your creditors. All credit accounts that you currently have will be closed.

It's important to understand that you must qualify for credit counseling. The amount of debt you have will be a determining factor in whether or not you qualify. A credit counseling service will be able to advise you on whether or not your debts are within the qualifying ranges. It's important to know and understand the differences in a Consumer Proposal and a Debt Management Plan, before calling the counseling service.

It's important to understand that under a Debt Management Plan you will be repaying the entire amount owed to creditors of unsecured debt. The benefit to you is seen in payments that are now more manageable. Added to the total debt owed will be any fees that are owed to the credit counseling service.

When you choose a Consumer Proposal, your credit counseling service will negotiate with your creditors on your behalf. Their goal will be to reduce the amount owed by you to your creditors. If your wages have been garnished then by law this must stop. This is one of the main differences between the two plans. With a Debt Management Plan your wages can still continue to be garnished, and it will be at the discretion of your creditors whether to remove it or leave it in place.

A bankruptcy trustee can handle a Consumer Proposal. They must be licensed as this is a legal agreement that is binding in a court of law. The government requires that consumers use their services in order to file a Consumer Proposal. Consumers need to understand that a bankruptcy trustee is experienced in handling many aspects of debt management.

Bankruptcy trustees are trained professionals and are skilled in debt management. They will evaluate your finances and explain the many options that are available to you. They fully understand and know how to implement Consumer Proposals and Debt Management Plans. Most offer a free consultation and it is in your best interests to consult with one in order to proceed with a plan that best suits your needs.

Tags: bankruptcy, consumer proposals, debt relief, trustees