Debt Management

Credit Counselling: Your Questions Answered

Reading time: 4 minutes


  • Credit counsellors offer services ranging from individual counselling to debt or money management plans
  • Companies, agencies and counsellors cannot quickly "fix" your credit scores or credit history
  • Take some time to research companies and credit counselling agencies

If you’re struggling with debt and trying to keep up with bills, credit counselling is an option you could consider. But it can be hard to figure out just what credit counselling can – and can’t – do for you, and how to find a legitimate organization rather than a “credit repair” scam operation.

Here are some answers to Canadians’ credit counselling questions from Julie Kuzmic, director of consumer advocacy for Equifax Canada.

Q. What can credit counselling do for me? 

A. Credit counsellors can provide services ranging from individual counselling to debt or money management plans. Counsellors will assess the current state of your finances and help find options for you, whether that’s a credit card consolidation loan, a plan to manage debt, a consumer proposal or bankruptcy. They can also help with budgeting, spending habits and credit use.

Credit counselling can be a helpful first step to review your debt, help you handle collection calls and offer advice on a path forward. The next step might be a money spending plan, a debt consolidation program, or credit counsellors might suggest that you talk to an insolvency trustee about a consumer proposal or bankruptcy.

It’s important to remember that companies, agencies or counsellors can’t quickly and easily “fix” your credit scores or your credit history. If the information on your credit reports is accurate and complete, the only way to improve your credit standing is through the passage of time and solid repayment behaviour. 

Q. How can I tell the difference between a legitimate credit counselling agency and a scam? 

A. Some companies may say they can solve your debt problems quickly, or boost your credit scores. Others may push high-interest loans to pay off your debts, or say they can manage your consumer proposal or bankruptcy. Only licensed insolvency trustees can legally provide access to consumer proposals and bankruptcies.

Q. How do I find a legitimate credit counselling agency? 

A. Take some time to research companies and credit counselling agencies. The Financial Consumer Agency of Canada recommends ensuring that the agency is in good standing with a provincial or national association. You can check the Better Business Bureau to see if there have been complaints about the agency. If an agency claims they are part of a government program, consider contacting the government department or agency that oversees that program to make sure. And remember – if something sounds too good to be true, it probably is.

Q. What is a debt management plan? 

A. A credit counsellor can make a debt management plan proposal to your lenders and creditors. Under a debt management plan, you can combine your debts into one monthly payment. In some cases, interest may be waived or reduced. But you’ll usually have to repay all your debts. It’s a voluntary agreement and not all lenders and creditors may agree to it.

In addition, you may have to pay a fee to the credit counselling agency. Debt management plans usually don’t cover debts owed to the Canada Revenue Agency or the Quebec Revenue Agency; student loans; auto loans; or mortgages. Make sure the counsellor explains which debts are and aren’t covered.

Q. What is the difference between a debt management plan, a consumer proposal and bankruptcy? 

A. A debt management plan (sometimes called a debt consolidation program or a debt repayment program) is an option that credit counsellors can facilitate which helps you pay your debts in full, sometimes with reduced interest rates or an increased timeframe. With this option, credit counsellors contact your creditors on your behalf to propose a payment schedule based on your ability to pay. 

The consumer proposal and bankruptcy processes are legal proceedings filed under Canada’s Bankruptcy & Insolvency Act. These procedures must be facilitated by a licensed insolvency trustee. Credit counsellors cannot offer this service; however, they will suggest these steps and provide guidance if these options are appropriate for you.

Q. Does credit counselling impact my credit scores? 

A. If you choose a debt management plan, consumer proposal or bankruptcy, all of these will impact your credit scores for some length of time, ranging from two years after you complete the debt management plan to 6 or 7 years  for a first-time bankruptcy (depending on your province).

Q. Where can I find more information about credit counselling? 

A. The Government of Canada has a detailed credit counselling page on its web site, with information from the Financial Consumer Agency of Canada. It has links to several associations where you can find a legitimate credit counsellor. 

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