In an interview, Mark compares what it costs to eliminate $35,000 in credit card debt through a non-profit credit counselling agency versus a consumer proposal with a Licensed Insolvency Trustee.
Transcript
The great irony of credit counselling
In Canada, for some reason, there's a real lack of knowledge in terms of what credit counselling is and how much it costs to eliminate a dollar of debt. It's one of the great ironies in personal finance in Canada that a debt relief option offered by a non-profit organization is the most expensive method of eliminating debt.
A $35,000 example
I will give an example. If you owe $35,000 and you go to a non-profit credit counselling agency, and I don't care which one, you're going to end up repaying about $37,000 to eliminate that $35,000 in debt. If you were to go to a Licensed Insolvency Trustee, and they are for-profit, and you were to do a consumer proposal, you would pay somewhere between 25% and 50% of that, so between $12,000 and $17,000 to eliminate that debt.
How credit counselling is marketed
This is their marketing. When you listen to the ads for the non-profit credit counselling agencies, what they say is, we will lower your monthly payment. That's true, but you're still going to pay the $37,000. That's why I say this is one of the great ironies of the debt relief industry in Canada.
I can tell you that if you go on the various government websites, they are shilling for the non-profit credit counselling industry. Yes, because the company offering the item to you wants that full dollar value back. I think people believe non-profit is good and for-profit is bad. But when you actually look at the facts, when you look under the hood and at how much it costs to eliminate a dollar of debt, it would be hard to justify someone who owes $35,000 in credit card debt doing credit counselling.