Credit Counsellors & Debt Consultants - Avoid paying for an unnecessary middleman

Chris Welker explains the difference between Credit Counsellors and Licensed Insolvency Trustees.

Dealing With Debt - Are you getting out of debt or just treading water?

Are you getting out of debt or just treading water?

What is a Debt Management Plan?

A debt management plan is an informal arrangement negotiated between yourself and your creditors by a credit counsellor.

Who should consider filing a Debt Management Plan?

  • Individuals who are not insolvent (ie: assets are greater than liabilities)
  • Those with a relatively small amount of debt

What is the difference between a Debt Management Plan and a Consumer Proposal?

Consumer Proposal:

  • Formal legislated process forces creditors to participate
  • Stops all interest charges
  • Allows for compromise of debt so you repay less than the total amount owed
  • Stops wage garnishment
  • You must be insolvent to file
  • Results in R7 credit rating which remains on credit report for three years after proposal payments have been completed

Debt Management Plan:

  • Informal arrangement negotiated between credit counsellor and creditors
  • Does not stop all interest charges
  • Pays back 100% of balance owed plus administration charge
  • Does not stop wage garnishment
  • Both solvent and insolvent individuals may file
  • Results in R7 credit rating which remains on credit report for three years after debts plus administration charges are paid in full

How are my payments calculated in a Debt Management Plan?

Take the total amount you owe, add a 10% administration charge, and divide that amount by 48 months. For example: if you owed $10,000 your monthly payments would be approximately $229.00 for 48 months.

If I can make payments to my creditors but not in the amount required by the Debt Management Plan what are my other options?

Consider making a consumer proposal: a formal action under the Bankruptcy and Insolvency Act. Read about Consumer Proposals here.

What should I look for when seeking a credit counsellor?

Although some credit counselling companies are legitimate there are many fraudulent credit counselors who charge high fees, provide little or no service and warn against discussing your money problems with a licensed insolvency trustee.

A credit counsellor has no greater ability to negotiate with your creditors than you do. The credit counselling industry is unregulated and anyone can claim to be a credit counsellor.

How can I spot a legitimate credit counsellor?

  • Not-for profit united way sponsored agencies
  • Never charge fees upfront
  • Accredited by the Ontario Association of Credit Counselling Services (OACCS)
  • Recommend reviewing your situation with a licensed insolvency trustee
  • No cost referral for you to meet with a licensed insolvency trustee

Over the years, we have developed relationships with Credit Counsellors across Ontario. Find a trusted Credit Counsellor in your area.

How can a credit counsellor help me?

Credit counsellors CAN help you by:

  • Providing budgeting and money management advice
  • Filing a debt management plan
  • Helping you communicate with your creditors

Credit counsellors CANNOT help you to:

  • Filing a consumer proposal
  • Deal with government debts
  • Compromise the total amount that you owe
  • Stop, by legislation, creditors from garnisheeing your wages

More Topics

Find out more about your situation. Jump to a different topic below.

Consumer Proposals

A consumer proposal is a formal debt settlement option legislated under the Bankruptcy and Insolvency Act and is filed with a licensed insolvency trustee. This option stops further creditor action and allows your debts to be compromised.


Filing personal bankruptcy allows you to be released from most of your debts. It is a formal process under the Bankruptcy and Insolvency Act and is filed by a licensed insolvency trustee.

Consolidation Loans

Debt Consolidation Loans are a popular debt management option for people who are experiencing money problems. Consolidation Loans consolidate your personal debts into one monthly payment, reduce interest charges and will not damage your credit rating.

Dealing With Collection Agencies and Wage Garnishment

Collection Agencies may take legal action against you if you owe money to your creditors and do not make payments. Collection Agencies must follow rules outlined in the Collection Agencies Act, which is regulated by the government.

Rebuilding Credit

Credit rating is a fluid concept and is always changing. No matter what you do, including filing personal bankruptcy or a consumer proposal, you can always rebuild your credit rating.

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