The credit counselling Fantasy;
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The credit counselling Myth;
credit counselling in Canada has become a approved method of handling debt but may not be the appropriate methode for clients to deal with their debt. In a growing number of cases clients will look for debt consolidation loans to control their un secured debt and start with a new slate. even though this takes care of the short term problem it generally causes bigger problems . The reasons why this happens are;.
First of all, Canadian’s are creatures of habit. By applying for a debt consolidation loan you’re only avoiding the basic issue, your habits. Although a consolidation loan will pay back your initial debt it wont deal with your spending habits. Usually individuals obtaining debt consolidation loans to pay back their debt end up in twice the debt they began with.
This is the second reason consolidation loans will not help. After individuals pay back their revolving credit it allows them access to available funds, allowing the process to repeat itself again. Often times people wind up with their unsecured debt maxed out again, as well as, the debt consolidation loan that they were issued to eliminate their debt. The most frequent statement I hear as a credit counsellor is “I need to secure a consolidation loan to re-pay my accounts”, “I don’t want to use unsecured debt again”. In theory this is wonderful but often times doesn’t happen
Unless an individual is prepared to tackle their overall problem (i.e. their spending habits) they will not succeed with a debt consolidation loan. In actual fact this is one of the main reasons that the banks have stopped issuing debt consolidation loans. They have, for the most part, stopped this because they recognise that this is only feeding the problem and not solving the problem. If you truly want to deal with your debt, cut up your credit cards, stop access to any revolving credit, make your monthly payments to pay the debt down and track your spending. It is only through the tracking of your spending habits that you will truly understand the fundamental issues of your debt. In order to deal with your debt problems, you must first understand how you got there in the first place.
If you want to live debt free you must recognise your unnecessary spending habits and make changes to eliminate them from your life. If you were to ask me what lesson I teach my clients the most, it’s how to track their spending and identify unnecessary spending.
Greg Martin
Debt Consolidator
Phoenix Credit and Debt Counsellors
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