Credit Counselling: FAQ
Get clear, honest answers to the most common questions about credit counselling.
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Is Credit Counselling Mandatory?
Answer:
Credit counselling is not mandatory, but it can be an extremely helpful first step if you’re struggling with debt and unsure where to turn. However, if you are filing for bankruptcy or a consumer proposal in Canada, attending two credit counselling sessions with a Licensed Insolvency Trustee is a legal requirement as part of the process. These sessions are designed to help you better understand budgeting, managing credit, and avoiding future financial difficulties.
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General faq
What is credit counselling, and how can it help me?
Credit counselling is a supportive service that helps you understand your debt relief options. A professional will review your finances and guide you through strategies to manage your debt — such as a debt management plan, consolidation loan, or even a consumer proposal. If you’re unsure where to begin, credit counselling is a compassionate, judgment-free place to start.
How does credit counselling work in Canada?
It starts with a one-on-one meeting where a certified counsellor learns about your financial situation. They’ll then walk you through your options and suggest the best path forward, whether it’s managing your budget, consolidating debt, or exploring legal debt solutions.
Is credit counselling the same as debt consolidation?
Not exactly. Credit counselling often involves creating a debt management plan that consolidates your payments — but it doesn’t involve taking on new debt like a consolidation loan would. It’s a more educational and guidance-based process.
Will credit counselling hurt my credit score?
In most cases, simply attending a credit counselling session won’t affect your credit. However, entering a debt management plan could show up on your credit report. The impact is usually less severe than missing payments or declaring bankruptcy.
Can I still use my credit cards during a debt management plan?
Most debt management plans require you to stop using credit cards while repaying debt. Your counsellor will explain how to adjust your spending habits and live without relying on credit.
What does it cost to get credit counselling?
Initial consultations are often free, especially with non-profit organizations. If you choose to enter a debt management plan, there may be small setup or monthly fees — but these are clearly explained upfront.
How long does the credit counselling process take?
The initial assessment can happen in just one session. If you enter a repayment plan, that can take up to five years, depending on your situation.
Can I switch from credit counselling to another debt relief option later?
Yes. A good credit counsellor will explain all your choices, and if your financial situation changes, you can explore other options like a consumer proposal or bankruptcy.
Are there risks to credit counselling?
The main risk is working with an unregulated agency that doesn’t have your best interests at heart. That’s why it’s important to choose a Licensed Insolvency Trustee or a reputable non-profit organization.
Will I be pressured into a solution?
No. Ethical counsellors should never push you into a particular option. They are there to inform and guide you — not sell you something.
Credit Counselling Options
What is a debt management plan (DMP)?
A DMP is a structured repayment plan arranged by a credit counsellor. It combines your unsecured debts into one monthly payment and may reduce your interest rates.
How is a consumer proposal different from credit counselling?
A consumer proposal is a legal agreement that only a Licensed Insolvency Trustee can file. It can reduce your debt by up to 80% and provide legal protection from creditors — something credit counselling alone can’t do.
Is a debt consolidation loan part of credit counselling?
Sometimes. Your counsellor might suggest a consolidation loan if it fits your budget. This loan combines all your debts into one with potentially lower interest.
Can I get help if I have government debt like student loans or taxes?
Debt management plans generally can’t include government debts. However, Licensed Insolvency Trustees can help you with legal solutions that do, like consumer proposals or bankruptcy.
What is financial education in credit counselling?
You’ll often receive tools and tips on budgeting, saving, and improving your credit. This guidance is just as valuable as the repayment plan itself.
Can I include payday loans or store credit cards?
Yes, most unsecured debts — including payday loans, store cards, and utility bills — can be part of a debt management plan arranged through credit counselling.
Does credit counselling include legal advice?
No, but a Licensed Insolvency Trustee can provide legally binding debt solutions and advice. Not-for-profit agencies can guide you but may not cover all legal options.
How do I know if my credit counsellor is trustworthy?
Choose someone who’s part of a recognized not-for-profit agency or is a Licensed Insolvency Trustee. They should be open, transparent, and registered under the appropriate provincial or federal authority.
Do I need to live in a certain province to get help?
No — many services, including those offered by Spergel, are available remotely across Canada. You can speak with a professional by phone, video call, or in-person.
Can I bring someone with me to a credit counselling session?
Absolutely. Many people find it helpful to bring a trusted friend or partner for support during the conversation.
How soon can I get an appointment?
Most agencies or trustees offer appointments within a few days — or even same-day—depending on availability. At Spergel, we aim to respond quickly so you can get relief as soon as possible.
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– Sarah, Ontario
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