Debt
Credit Counselling and Debt Management Plans in Canada
A credit counsellor can help with a budget or set up a debt management plan: one monthly payment, often with interest reduced or removed. How it works, what it costs, and how to choose a reputable agency.
What does a credit counsellor do?
Reviews your income, spending and debts, helps you build a budget, and explains your options. Talking to a credit counsellor does not affect your credit score. Many agencies also run free courses and seminars.
What is a debt management plan?
An informal arrangement the counsellor proposes to your creditors: your debts are combined into one affordable monthly payment to the agency, which pays your creditors. Creditors may agree to reduce or remove interest and fees.
You usually still repay 100% of what you owe. Plans generally cover unsecured debts like credit cards, not mortgages or car loans, and some creditors may refuse to take part.
What does it cost?
No reputable agency charges for the first meeting. Debt management plans may have setup or monthly fees; ask for every fee in writing and whether they can be waived if you can’t afford them.
How do I choose a reputable agency?
Check its standing with Credit Counselling Canada or the Canadian Association for Financial Empowerment, and look for complaints with the Better Business Bureau or, in Quebec, the Office de la protection du consommateur. Both non-profit and for-profit companies offer these services.
What if a debt management plan isn’t enough?
A counsellor has no legal power to stop collection. If your debts are beyond what you can repay in full, a Licensed Insolvency Trustee can explain a consumer proposal or bankruptcy, which are legally binding; their first consultation is usually free.
Keep reading
DebtHow to Pay Off Credit Card Debt in CanadaFive ways to pay off credit card debt in Canada, with the math: paying $400 a month on $7,500 across three cards clears it in 1 yr 11 mo; the minimum only would take 24 yrs 10 mo.
DebtConsumer Proposal vs Bankruptcy in CanadaBoth are legal ways out of debt you can’t repay, arranged through a Licensed Insolvency Trustee. How they differ in what you pay, how long they last, what happens to your assets and your credit.- LoansDebt Consolidation Loans in CanadaHow combining debts into one loan works, when it saves money, and the traps that can leave you deeper in debt.
Banking50/30/20 Rule: How to Make a Budget in CanadaA simple way to make a budget in Canada: track your take-home pay and spending, split it with the 50/30/20 rule, and automate savings, with worked examples for three incomes.
Official sources and further reading
Terms vary by product. Confirm the provider’s current terms before acting. This guide does not predict approval, realized value or credit-score changes. How WalletReturn calculates value