Stopping Interest Charges

Many creditors now agree to stop or reduce interest charges on accounts where their customers are participating in debt repayment programs through a Not-For-Profit Credit Counselling Debt Management Program. Creditors have found that when they waive interest, they give much added encouragement and incentive for people to pay their debts.

Many potential bankruptcies are being eliminated because of the cooperative efforts of most credit grantors who encourage debtors to seek help when they get into financial difficulties, then back up their advice by cooperating with an honest effort to regain solvency, to live up to lending agreements.

Purdue University conducted a study on the impact of waiving finance charges on successful completion of debt management programs. The purpose of the study was to find out if cancelling interest charges had an effect on debtor follow through. The University chose 661 cases from a wide area across the United States. The study showed that the likelihood of success of the repayment programs increased as a greater proportion of creditors stopped charging interest. Also the amount of debt repayment rose as the number of creditors waiving interest increased. The report of the findings of this study concluded that the waiving of interest charges has a great influence on the percentages of debt that will be repaid. As more creditors suspended interest, more money was collected by the creditor.

Overextended debtors seeking assistance through the 24 Not-For­Profit Credit Counselling Agencies across Ontario can be assured that their creditors will give fair consideration to stopping interest charges. Most credit grantors have policies stating that it is appropriate to stop interest charges or consider reduction of interest charges when their customers are repaying their debts through a credit counselling program. It is a win win situation for both creditor and debtor.

Family Services Perth-Huron is an accredited member of the Ontario Association of Credit Counselling Services. Since 1974 many people throughout Grey, Bruce, Huron and Perth Counties have repaid their debts and regained financial solvency by participating in creditor approved and recommended debt repayment programs.