Credit counselling - is it worth it?

[Halfasianmomma]

The search function is disabled right now so I can't really do a good search of this forum.

My question is regarding those supposedly free credit counselling agencies in Canada; are they worth looking into? Are they really free or do they pay themselves by adding onto your single "low monthly debt repayment"?

The reason I ask is because I have TERRIBLE credit (an R9 rating after my bankruptcy...I couldn't get financing for a stick of gum), and my DH is probably somewhere in the land of R5 (120 days past due). He was unemployed for 4 months and I was supporting our little family up until recently when I went on maternity leave. Now that he's working full-time and that I'm receiving mat benefits, I really want to look into fixing our crappy credit because *someday* in the FAR FAR future, I'd love for us to own a home. There's a city sponsored program that exists here to encourage first time home buyers, and that, coupled with a condo loan program for low-income families of 3 or 4, might allow us to buy a townhome...but if our credit is horrible, I don't think we can get a mortgage!

I've looked into debt management books and credit discussion forums online, but a lot of them have to do with the US, so some of the information isn't applicable. From what I can gather, I need to do the following:

1) get a copy of my and DH's credit reports
2) look at all our debts and figure out which to pay back first
*** this is going to take the longest, b/c I probably owe about 22K in student loans and another 5K in various debts, while DH probably only owes 6K in credit card/student loans
3) put 1K into savings
4) ....then I'm lost...

All this is going to be tricky because we're only functioning on mat benefits and DH's salary (oyah and my baby is due 2 days from now).

I'm just wondering if I'd be better off trying to wing it by myself or looking into credit counselling so someone can help me consolidate all my debts into one...

Input anyone?
TIA

[thewaggonerfamily]

Originally Posted by Halfasianmomma

The search function is disabled right now so I can't really do a good search of this forum.

My question is regarding those supposedly free credit counselling agencies in Canada; are they worth looking into? Are they really free or do they pay themselves by adding onto your single "low monthly debt repayment"?

The reason I ask is because I have TERRIBLE credit (an R9 rating after my bankruptcy...I couldn't get financing for a stick of gum), and my DH is probably somewhere in the land of R5 (120 days past due). He was unemployed for 4 months and I was supporting our little family up until recently when I went on maternity leave. Now that he's working full-time and that I'm receiving mat benefits, I really want to look into fixing our crappy credit because *someday* in the FAR FAR future, I'd love for us to own a home. There's a city sponsored program that exists here to encourage first time home buyers, and that, coupled with a condo loan program for low-income families of 3 or 4, might allow us to buy a townhome...but if our credit is horrible, I don't think we can get a mortgage!

I've looked into debt management books and credit discussion forums online, but a lot of them have to do with the US, so some of the information isn't applicable. From what I can gather, I need to do the following:

1) get a copy of my and DH's credit reports
2) look at all our debts and figure out which to pay back first
*** this is going to take the longest, b/c I probably owe about 22K in student loans and another 5K in various debts, while DH probably only owes 6K in credit card/student loans
3) put 1K into savings
4) ....then I'm lost...

All this is going to be tricky because we're only functioning on mat benefits and DH's salary (oyah and my baby is due 2 days from now).

I'm just wondering if I'd be better off trying to wing it by myself or looking into credit counselling so someone can help me consolidate all my debts into one...

Input anyone?
TIA

I'm not a Canadian, so bear that in mind. But with the big picture, I'd really recommend Dave Ramsey. You should be able to get his Total Money Makeover and Financial Peace at the library. IMHO read both. His baby steps are:
1. $1,000 to start an Emergency Fund
2. Pay off all debt using the Debt Snowball
3.Three to six months of expenses in savings
4. Invest 15 percent of household income into Roth IRAs and pre-tax retirement
5.College funding for children
6.Pay off home early
7.Build wealth and give!


As far as the credit report, I don't know how it differs from the US, but it sounds similar. You might get some help at creditboards.com I think they had a canadian section, but if not, I'm sure they could direct you, they are very knowledgeable there. What you will probably need to do is dispute incorrect info. Even stuff that is partially correct should not be on your credit report and having it removed it should help your rating. Good luck! I hope you have a good birth! Oh and go enjoy a MacIntosh toffee and some butter tarts for me! Yum!

[lifeguard]

Getting a credit report is a good idea 'cause it lets you see exactly what the banks are seeing. And gives you the opportunity to fix anything that is not right.

DH & I looked into the credit counselling thing about 7 years ago in Ontario. We decided not to do it 'cause it basically meant going to our creditors & saying if you don't help us out we will declare bankruptcy. We just weren't quite there yet. We ended up selling our house & moving into my in-laws basement. It was a year from hell but it was worth 'cause it gave us the opportunity to get our feet under us.

I do think they can be very helpful but I would only do it as an absolutely last resort.

[Auntie Sapphire]

I signed up with a credit counseling service (in the US) for a while. I could not keep up with the monthly payments they set for me, and ended up defaulting. I have since read that credit counseling services look just as bad as bankruptcies on a credit report.

In my opinion, I think you should not enter any new obligations right now - that new baby will be enough!