Debt Consolidation Services in Canada
Find the Right Debt Consolidation Option for You
Debt is a numbers game, and bringing the numbers down is your goal. Debt consolidation takes multiple debts or payments and combines them so that you only have one payment to make. Having fewer payments each month is always a relief, not to mention the savings you get if your debt is consolidated at a lower interest rate. But the thought of borrowing more money to pay off what you owe can be scary. Learn about the different debt consolidation options in Canada and the services available so you can find the right solution.
Common Reasons to Consolidate Your Debt
There are a lot of reasons people want consolidate their debt:
- Living expenses have gone up and you can no longer make the monthly payments on all your debts.
- Payments on high interest credit card debts are eating into your budget. You want to pay off these credit cards but you may have been turned down for a bank loan or personal loan.
- You’ve been keeping yourself afloat and paying debts using a line of credit or bank overdraft.
- You’re unable to refinance your mortgage to consolidate debts like you have in the past.
- You have so many debts that it’s hard to keep track of them all, causing missed or partial payments.
- A build-up of payday loans due to debt problems, financial challenges like lost or reduced income, or an unaffordable car loan payment.
Make Repayment Simple
Consolidation simplifies your finances. If you have multiple debts from multiple creditors with multiple interest rates, repayment schedules, and other conditions, then keeping track of them all can feel overwhelming. When you consolidate your debts or payments, you’ll only have to keep track of one payment. If some or all of the debts you’re carrying have high interest rates, then consolidating them with a lower interest rate will also all you to save money. All consolidation options do this, but they work in different ways. Get a snapshot of each with their pros and cons below.
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Many different debt consolidation options are available in Canada. We help people discover their options in Alberta, British Columbia, Manitoba, Ontario, Saskatchewan, Yukon, Northwest Territories, and Nunavut. Keep reading below to see an overview of common options, but you can also see which options may specifically apply to your situation by answering some quick questions.
Debt Consolidation Loan
What is a Debt Consolidation Loan?
A debt consolidation loan is when you borrow money to pay off other debt. The money from the new loan pays off the other debts, and then you only make payments on this one new loan. A debt consolidation loan will often have a lower interest rate than what your other debts are charging you and can be used to consolidate debts such as bills, credit cards, a line of credit, or an overdraft.
There might also be better terms and conditions, but each lender is different. When you apply for a consolidation loan through a debt consolidation company, getting approved can become more difficult if you’re behind on your payments. But the biggest danger with these loans is that you can end up accumulating the same amount of debt you consolidated by the time you pay off the loan if you don’t carefully live with a budget while you’re paying off the loan. That’s why it can be a good idea to speak with a credit counsellor when you’re considering debt consolidation loans. They can help you create a budget and a plan to ensure your debt is paid off within a reasonable time period and not re-accumulated.
Pros:
- One monthly payment
- Potentially better interest rate
Cons:
- Need to qualify
- Can make your debt load worse
- Need a satisfactory credit score
- Often requires collateral for the loan
Credit Card Balance Transfer
Debt Consolidation Using a Credit Card
Credit cards often offer attractive promotions, but these come with strict terms and conditions, especially when debt is being consolidated. Credit card debts can be paid off with a new credit card (consolidating credit card debt onto one credit card), but it often doesn’t work out as planned. Even if the new card has a low interest rate for debt consolidation, that low rate often won’t apply to any new purchases you make. Also, if you haven’t paid off the balance transfer amount by the time the promotional rate expires, you could be saddled with hefty payments.
However, one advantage of a balance transfer is flexibility: you can aggressively tackle and consolidate credit card debt, but in an emergency, you can also temporarily fall back to making minimum payments.
Pros:
- Payment flexibility
- Low interest rate to start
Cons:
- Need to qualify
- Could keep you in debt longer
- Promotional interest rates expire quickly
- Typically switches to a very high interest rate
You may have an idea of how to resolve your financial situation, but it’s very possible that other viable options may be available to you – other options that could potentially resolve your situation more quickly and affordably with payments that actually fit your budget. Every option has pros and cons, but it’s definitely worth taking a few minutes to see what your other options look like. Click below to answer 9 questions and see your results.
Home Equity to Consolidate Debts
Refinance Your Home or Get a Second Mortgage
Home equity is what’s left when you subtract what you owe on your house from what it’s worth. Some people think of home equity as how much they’ve paid off on their mortgage. Depending on how much equity you have in your home, you might be able to borrow against it and use the money you get to pay off debt. There are mortgage rules in Canada about using your home equity to consolidate debts.
Before increasing your mortgage to deal with your debts, take out a second mortgage at a higher interest rate, or apply for a home equity loan, talk to an experienced credit counsellor. There may be other options you may wish to consider as well.
Pros:
- Low interest rate if done through a bank or credit union
- Flexible payment arrangements
Cons:
- Super high fees & interest if done through a subprime lender
- Must have enough equity in your home
Debt Settlement in Canada
A Less Often Used Way of Becoming Debt Free
When your finances have been severely impacted and it doesn’t look like the next 5-10 years will be better, but you do have a lump sum of money available, then offering your creditors a settlement might be possible. A debt settlement is a negotiated payment to immediately pay back only a part of the debts you owe in a one-time lump sum. In return, your creditors write off the rest. This will let you pay less than you owe and become debt free instantly, but it can be hard to get creditors to agree to your offer and you’ll need the money ready right away.
Your credit rating will also be affected for 6-7 years after the payment goes through, although that can be reduced to 2 years if you work with a non-profit organization like us.
Pros:
- Repay less than you owe
- Instant debt relief once creditors agree
Cons:
- Lump sum needed before making an offer
- Negotiations needed with creditors
- Affects credit rating
Debt Settlement in Canada
A Less Often Used Way of Becoming Debt Free
When your finances have been severely impacted and it doesn’t look like the next 5-10 years will be better, but you do have a lump sum of money available, then offering your creditors a settlement might be possible. But, what is debt settlement? It is a negotiated payment to immediately pay back only a part of the debts you owe in a one-time lump sum. In return, your creditors write off the rest. This will let you pay less than you owe and become debt free instantly, but it can be hard to get creditors to agree to your offer and you’ll need the money ready right away.
Your credit rating will also be affected for 6-7 years after the payment goes through, although that can be reduced to 2 years if you work with a non-profit organization like us.
Pros:
- Repay less than you owe
- Instant debt relief once creditors agree
Cons:
- Lump sum needed before making an offer
- Negotiations needed with creditors
- Affects credit rating
File a Consumer Proposal
Through a Bankruptcy Trustee (now called Licensed Insolvency Trustees)
Most people know about bankruptcy, but not as many know about a consumer proposal. It’s a legal agreement between you and your creditors arranged and administered by a bankruptcy trustee, to repay your debt with monthly payments that can stretch to almost 5 years. Instead of consolidating your debts into one loan, it consolidates your debt payments. Your debts will still be with your creditors, but the amount you pay your trustee each month is disbursed to your creditors after their fee is deducted.
Like bankruptcy, filing a consumer proposal is a big decision that will affect your credit for years to come and can even impact future career opportunities. Similar to bankruptcy, the amount of debt you have to repay is often reduced if your creditors agree to the proposal your trustee puts forward. This often results in lower monthly payments.
Pros:
- No interest
- Often repay less than you owe
- Pauses active debt collection on student loans
Cons:
- Not private – consumer proposals are a permanent public record
- Typically does a lot of damage to your credit rating for about 8 years
- Missing more than 3 payments ends your proposal and you can’t file another one
File a Consumer Proposal
Through a Bankruptcy Trustee (now called Licensed Insolvency Trustees)
Most people know about bankruptcy, but not as many know about a consumer proposal. It’s a legal agreement between you and your creditors arranged and administered by a bankruptcy trustee, to repay your debt with monthly payments that can stretch to almost 5 years. Instead of consolidating your debts into one loan, it consolidates your debt payments. Your debts will still be with your creditors, but the amount you pay your trustee each month is disbursed to your creditors after their fee is deducted.
Pros and cons of consumer proposal
Like bankruptcy, filing a consumer proposal is a big decision that will affect your credit for years to come and can even impact future career opportunities. Similar to bankruptcy, the amount of debt you have to repay is often reduced if your creditors agree to the proposal your trustee puts forward. This often results in lower monthly payments.
Pros:
- No interest
- Often repay less than you owe
- Pauses active debt collection on student loans
Cons:
- Not private – consumer proposals are a permanent public record
- Typically does a lot of damage to your credit rating for about 8 years
- Missing more than 3 payments ends your proposal and you can’t file another one
Debt Management Program (DMP)
A Private Way to Get Debt Relief & Get Out of Debt Without a Public Record
The journey to becoming debt free can be hard, so why walk it alone? Our debt management program gives you the benefits of payment consolidation and the guidance of an expert credit counsellor. A DMP doesn’t consolidate your debts, but rather consolidates your debt payments. We’ll talk with your creditors to combine your payments into one monthly sum that fits your budget. You pay this to us and we disburse it to your creditors, who will greatly reduce or waive the interest they charge you going forward.
Your credit counsellor will help you stay on track to becoming debt free and will even help you rebuild your credit rating afterwards.
Pros:
- Greatly reduced or 0 interest
- Debt free within 5 years
- Private: DMPs are kept out of public records
- Credit counselling support
Cons:
- Can impact credit rating
- Nominal fee
- Not all debts can be included
Debt Management Program (DMP)
A Private Way to Get Debt Relief & Get Out of Debt Without a Public Record
The journey to becoming debt free can be hard, so why walk it alone? Our debt management program (DMP) gives you the benefits of payment consolidation and the advice of an expert credit counsellor in Canada. A DMP doesn’t consolidate your debts, but rather consolidates your debt payments. We’ll negotiate with your creditors to combine your payments into one monthly amount that fits your budget and greatly reduces or eliminates the interest they charge you going forward. So you end up making one monthly payment to us, and we disburse it to your creditors.
Your credit counsellor will help you stay on track to becoming debt free and can even help you rebuild your credit rating afterwards.
Pros:
- Greatly reduced or 0% interest
- Debt free within 5 years
- Private: DMPs are kept out of public records
- Credit counselling support
Cons:
- Can impact credit rating
- Nominal fee
- Not all debts can be included
Last Updated on September 16, 2024
Not sure which option is right for you?
Get answers from our certified counsellors.
With so many debt consolidation options out there, it can feel overwhelming to try and find the right one by yourself. One of our professional credit counsellors would be happy to guide you through this process by carefully reviewing your whole financial situation with you and answering any questions you have. Consolidated debt counselling is always free, confidential and without obligation.
Additional Debt Consolidation Methods
Line of Credit or Bank Overdraft to Consolidate Debts
You can use a line of credit or bank account overdraft to consolidate your debts into one monthly payment. The downside of doing this, though, is that you run the risk of never paying off your debt because there is no fixed repayment schedule to ensure the debt is paid off with a set number of years. Learn more about all the pros and cons of consolidating debt with a line or credit or overdraft.
Rather than using this type of credit that for many people never gets paid down very much, we can help you look at all of your options. Having a loan or repayment plan with one monthly payment that fits your budget will let you pay all of your debts off and get back on track with your finances.
Borrow Money from Family and Friends
What to do if Friends and Family are Willing to Help
When things get tough, friends or family members are often willing to lend a hand and might be willing to lend you the money you need to consolidate your debt or co-sign a loan for you. The downside of borrowing money from a family member or friend, though, is that if you struggle to pay the loan back, it may strain your relationship with them. Learn more about the pros and cons of consolidating debt by borrowing from friends or family. Before you head down this path, we’d suggest you speak with one of our experienced credit counsellors to see what they suggest. They may agree that this is a good option for you, or they may be able to show you some other options and help you put together a realistic plan to get out of debt on your own.
Debt Consolidation Advice
Choosing the Right Debt Consolidation Option
There are many debt consolidations options in Canada. Choosing the one that’s best for you takes time. You also want to find the best debt help and advice. To help you out, here are some suggestions about how to get the best debt consolidation advice for free. You can also feel free to speak with one of our accredited credit counsellors to get expert debt consolidation advice and look at all of your options.
Learn More About Debt Consolidation Options with a Workshop
Attend an Online Workshop to Learn How to Manage Money Better and Consolidate Debt
Rather than just trying to figure everything out on your own, avoid some of life’s financial bumps and bruises by learning from others. You can join one of our friendly, interactive financial online workshops, we call webinars, and learn how to create a realistic, personal budget that works, learn how to manage money better, improve your credit, and get out of debt. Lots of tips, suggestions, and debt consolidation methods are presented. Check out these free, online workshops and see if any are of interest to you.
If You’re Looking for Debt Consolidation Company Reviews
If you’re looking for the best debt consolidation company and reviews to back it up, we’d suggest you check us out. We help people explore all their options to get out of debt and then put together a plan to accomplish this. As a non-profit, our help is free and confidential.
We’re called the Credit Counselling Society. We are a leading debt and credit counselling service in Canada and are registered with the Government of Canada as a non-profit organization. We are also licensed by the provincial governments of Alberta, British Columbia, Manitoba, Ontario and Saskatchewan. Since we first opened our doors in 1996, we are proud to have maintained the Better Business Bureau’s top rating of A+ the whole time. You can also find around 1,500 reviews for the Credit Counselling Society on major review sites.
Your Next Step – Explore Your Debt Consolidation Options
What to Do If You Need to Consolidate Your Debts
If you’re looking for debt consolidation options, contact us to make a free, confidential appointment with one of our credit counsellors. They will help you explore your options and give you the information you need so that you can make an informed decision. Speaking with us is always free, confidential, and non-judgmental. You literally have nothing to lose but your stress, sleepless nights, and your debts .
CCS negotiated on my behalf to bring down my interest rates to zero
Excellent way to consolidate, to make payments towards the principle only! CCS negotiated on my behalf to bring down my interest rates to ZERO with all my creditors while I paid off the debt load, that would have taken me 150 years to pay off, accomplished in 4.5 years. Now I am debt free!
Lori
Find out how to get debt relief
Get the clarity you need.
Objective debt consolidation advice.
When you’re going through financial difficulty there are a lot of options to consider. So it can be super helpful to sit down with an knowledgeable, non-profit credit counsellor who can objectively review all your debt consolidation options with you, give you the right advice and guidance, and help you make a plan to resolve your difficulties. Once you can see your way out, you can regain your peace of mind and follow your plan forward with confidence.
Get Some Help – It’s Free
Get a free appointment to explore your options and get back on track.
Related Topics
Declined for a Loan?
Here are 5 reasons why people are declined for a consolidation loan, and what to do instead.
Mistakes to Avoid
Here are 4 common debt consolidation mistakes, how to avoid them, and where to get help.
Debt Management Program
You’re not alone if you’re wondering if a DMP is right for you. Here’s what it is and how it works.
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