You’re in debt and need to explore debt consolidation and debt solutions. You set up an appointment with a not-for-profit credit counselling agency and speak to an accredited credit counsellor. They give you professional, private, non-judgmental guidance. This is done for either no fee or a very small fee. You find yourself asking – who pays for this?
Funding for not-for-profit credit counselling comes from several sources.
Creditors
A large amount of funding for not-for-profit credit counselling comes from creditors, the companies that lend the money. This ranges from major banks to online lenders.
Canada’s creditors recognize that not-for-profit credit counselling services play a key role in providing money management and budgeting skills to their clients and to the broader community. For this reason, creditors help strengthen this sector and encourage the services it delivers.
Does that mean that not-for-profit credit counselling agencies are working for the creditors?
Not at all. You know how CIBC supports the Canadian Breast Cancer Foundation? They also support not-for-profit credit counselling. They trust credit counselling services will provide you with all the information you need to make the best financial decisions. Those decisions are not tied to any specific creditor funding so how you move forward is always your choice.
Creditors are not in the business of credit counselling but they do want you to pay them back and to succeed. Evidence shows that not-for-profit credit counselling works. It not only helps you get out of debt but it also improves your credit rating in time. The skills you learn through counselling make you a responsible, valued customer in the creditor’s eyes. For these reasons and more, they are happy to fund these counselling services.
Client Fees
A smaller source of funding comes from credit counselling clients who choose to use a debt repayment program. This program involves credit counsellors contacting creditors to negotiate repayment terms and combine debts into one easy monthly payment.
The fees associated with this program help to cover the administration costs but more importantly, they fund the on-going counselling that takes place. Often the fee you might have to pay is far less than what you would pay in interest. Credit Counselling Canada has a national policy regarding client fees. This makes sure no one is denied service if they are unable to pay. If a debt repayment program is an option for you, always ask your counsellor about potential fees. This will help you make an informed decision.
Grants and Donations
On top of that, funding to support the work of not-for-profit credit counselling may come from grants and donations. These can be municipal, provincial, or federal as well as from foundations, community groups, and the United Way. Not-for-profit agencies apply for funding to support programs that address the needs of the communities they serve. This ranges from projects on elder financial abuse to financial literacy education in school.
Like most not-for-profit agencies, Credit Counselling Canada members work diligently to ensure sustainable funding. This allows them to best serve you and your community.