4.6.6 Credit counselling

Credit counselling agencies provide a range of services for people in financial difficulty. Credit counsellors can help you find the best strategy to pay off your debt. They can also offer you information and assistance on:

• how to make a budget and stick to it
• how to use credit wisely
• how to improve your credit report and credit score
• how to stop getting into debt

Some credit counselling agencies are free, non-profit organizations, while others offer advice for a fee. Compare different agencies and ask questions to make sure you know what costs are involved and what services you will receive.

Debt management programs

Your credit counsellor may suggest a debt management program to help you pay off your debts. Once you are enrolled in such a program, the counsellor will contact your creditors and ask for their cooperation. In some cases, your creditors may agree to reduce or eliminate the interest rate and fees on your debts.

To sign up for a debt management program, you usually have to sign a contract with the agency. Under the contract, you make regular payments to the agency, and the agency uses those payments to pay off your creditors according to the plan.

Entering into a debt management program is completely voluntary. You should not feel pressured to participate without considering all of the implications.

Keep in mind that most credit counselling agencies, although they are not-for-profit, receive a percentage of the debt you repay your creditors when you adopt their recommended debt management program. This may affect the choice of solutions they propose. Be sure to ask about all the options available to you.

Finding a credit counsellor

Provincial governments, not-for-profit and for-profit organizations all offer credit counselling services. For a list of some of the not-for-profit services available across Canada, visit the websites of Credit Counselling Canada or the Canadian Association of Credit Counselling Services. In Quebec, contact the Association coopératif d'économie familiale (available in French only) or any organization recognized by the Office de la protection du consommateur.