Getting help from a credit counsellor

You may be having trouble paying back your debt or keeping up with your payments. In this case, you may want to talk to a credit counsellor. Simply talking to them won't affect your credit score.

A credit counselling agency can provide a range of services, such as:

Finding a credit counselling agency

Both not-for-profit organizations and for-profit companies offer credit counselling services.

Do your research to find a trustworthy organization and a qualified counsellor. Make sure you know what services they offer and how much they cost.

Research the agency’s reputation

Make sure that the agency is in good standing with a provincial or national association. These associations require members to maintain specific standards of practice.

You can find agencies through these associations:

In Quebec, budget and credit counselling services are often offered by Associations coopératives d’économie familiale (ACEF). 

You can find the ACEF member list through this organisation:

Find out if there have been any serious or unresolved complaints about the agency. This includes late payments to creditors or false advertising.

Check for complaints about the agency with:

Be cautious when looking for help

Some companies offering help to pay off debt or repair credit are misleading consumers.

What you need to know when getting help to pay off debt or repair your credit.

Look carefully at the agency’s advertising

Be cautious. If it sounds too good to be true, it probably is.

Some agencies or companies may claim or misrepresent that they:

Keep in mind:

Find a government department or agency:

Find out about the agency’s services and costs

The services that credit counselling agencies offer and the fees they charge can vary greatly.

Ask the following questions about their services to help find an agency that is right for you:

Ask about the counsellor's qualifications

Credit counsellors aren't legally required to have any specialized training. However, many credit counsellors have some training.

Ask about the counsellor’s qualifications, including:

The purpose of the training is to provide counsellors with the unique skills required to help consumers with their personal finances. 

Are you comfortable with the credit counsellor

If the credit counselling agency’s services seems to meet your needs, ask to meet with a credit counsellor. This way you can see if it's a good match. No reputable credit counselling agency will charge you for the first meeting.

Make sure you trust the counsellor’s opinion and judgment. If you're not comfortable, ask for another counsellor.

Debt management plans

You can sign up for a debt management plan through a credit counsellor.

A debt management plan is an informal proposal your credit counsellor makes to your creditors on your behalf. It allows you to consolidate your debts into one affordable monthly payment. In some cases, you may not have to continue to pay interest on your debt. You'll usually have to repay 100% of your debts.

Before you enroll in a debt management plan, you’ll meet with a credit counsellor. They’ll assess your situation, help you make a budget and give you tips about dealing with your debt. If you decide to sign up for a debt management plan, they’ll contact your creditors on your behalf.

Your credit counsellor will ask your creditors if:

Some of your creditors may not accept your debt management plan. In that case, your credit counsellor will usually suggest you make payment arrangements directly with those creditors.

If your creditors accept the debt management plan, you'll then make regular payments to the credit counselling agency. The agency will use your payments to pay off your creditors according to the plan. Keep in mind that creditors can still use collection agencies to recover the money you owe. Your credit counsellor can ask creditors to stop, but they have no legal power to make them stop.

What to consider before you sign up for a debt management plan

Think about the following before you enroll in a debt management plan.

How much it costs

Make sure you know what fees they charge, as these may vary.

These fees may include:

Ask if they’ll reduce or eliminate fees if you can't afford to pay them.

Will it save you money

A lower interest rate will save you money. But the credit counselling agency may charge you a fee for its services.

Compare the credit counselling agency’s fees with what you'd save in interest on the debt management plan. If the agency’s fees are higher than what you'd save, you may want to seek help from other sources.

The type of debts covered

Debt management plans may not cover all types of debt. You'll need to continue to make payments on any debt not included in your debt management plan.

They usually cover debts, such as:

Debt management plans usually don't cover secured debts like mortgages and car loans. With secured debts, the company you owe money to may take your asset if you don't make payments.

Make sure that the credit counsellor explains exactly which of your debts the program will cover.

Understand your responsibilities

When you're following a debt management plan, make sure you:

If you don't make payments on time, your debt management plan may be cancelled.

Review your agreement carefully

If you decide to sign up for a debt management plan, carefully read the agreement before you sign it. Make sure you understand what costs you’ll have to pay and what services you'll receive. Ask questions if you don't understand any of the terms and conditions. Keep a copy of the agreement.

Learn about what you need to know before you sign a contract.

What to do during your debt management plan

Ask the agency for regular written status reports on your plan. Also ask for receipts of all transactions involved with the debt management plan. This will provide you with proof that the agency made your payments. While you're following the plan, companies you owe money to may stop sending you monthly statements.

Carefully review your status reports or monthly statements. Make sure the agency is paying your creditors on time. This will avoid any late fees or negative entries on your credit report.

You can also monitor your progress by reviewing your credit report. It includes information on whether you're making regular payments.

Learn how to get a copy of your credit report.

Comparing your options

Everyone’s situation is different. Before making a decision, talk with different sources to see how they can help with your situation.

If you’re having serious financial problems, there are other options than debt management plans. You may consider working with a licensed insolvency trustee. A trustee is licensed by the  Office of the Superintendent of Bankruptcy to handle debt problems under consumer proposals and bankruptcies. Both are legal processes you follow to pay off your debt.

Find a licensed insolvency trustee.

When you meet with trustees, they’ll first assess your financial situation. They’ll typically provide this financial assessment for free. If it suits your financial situation, you may then consider working with them for a consumer proposal or bankruptcy.

Learn more about consumer proposals.

Learn more about bankruptcies.

To help you decide on the best option for your situation, you may want to ask the following questions:

Compare the advice you get from each reputable source before you decide which option is best for you.

Compare debt solutions on the Office of the Superintendent of Bankruptcy of Canada website.

Filing a complaint about a credit counselling agency or credit counsellor

Provincial and territorial governments are responsible for regulating credit counselling agencies and investigating consumer complaints.

Contact your provincial or territorial consumer affairs office.

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