Debt Solutions Webinar

Presented by Catherine Lopez, B.A. | Financial Education Specialist, Credit Counselling Society
Approximate Runtime: 28 Minutes

The following enhanced transcript has been edited for readability and organized into sections to help you quickly find topics discussed throughout the workshop.

[0:02] Introduction: Why You Are in the Right Place

Whether you are here because debt is personally stressful right now or because you want to be proactive and informed, this workshop is designed for you.

The Credit Counselling Society is a Canadian non-profit organization that has been supporting Canadians since 1996. We serve clients across Canada in both English and French, primarily through free and confidential credit counselling appointments. Every conversation remains private. There is no pressure and no obligation, just a clear assessment of your situation and your options.

One thing the Credit Counselling Society hears again and again is that even just reaching out, before taking any action at all, brings a sense of relief. Creating that sense of hope is central to everything we do.

[1:25] How People Actually Get Into Debt

A common assumption is that debt comes from poor financial decisions. The reality is that debt most often comes from life events: unemployment, underemployment, high housing costs, separation, illness, or simply needing to use credit to cover basic living expenses. These situations can happen to anyone at any time.

This workshop is a judgment-free space. Understanding your options is the first step toward getting out from under financial pressure.

[2:42] The Real Cost of Credit: Why Minimum Payments Are a Trap

Understanding how interest works is essential before choosing any repayment strategy.

The minimum payment scenario:

• Original balance: $3,000
• Interest rate: 19.9% (typical for a standard credit card)
• Monthly payment: 2% of the balance, or $60

If you only ever make the minimum payment, it takes 52 years and 7 months to pay off that $3,000. The total interest paid is over $12,700, making the total repaid $15,709 on a $3,000 purchase.

What adding $40 per month does:

• Monthly payment: $100 (minimum plus a consistent $40)
• Time to pay off: 3.5 years
• Interest paid: $1,184
• Total repaid: $4,184

That one change, an extra $40 per month paid consistently, saves over $11,500 in interest and more than 49 years of payments.

The lesson is not that credit is bad. Credit exists for a reason and can be a useful tool when used well. The lesson is that knowing your options and making an informed choice matters enormously.

[5:45] Important Credit Card Facts to Know

• Cash advances accrue interest immediately and at a higher rate than regular purchases
• Regular purchases have a billing cycle, meaning interest may not start until the next payment cycle
• Going over your credit limit is often permitted but triggers a fee
• Late payments cause interest to accumulate from the start of the billing period, not the due date

[6:43] Understanding the Three Types of Debt

Before you can choose a debt relief strategy, you need to know what kind of debt you are dealing with. Not all debt is treated the same way.

Unsecured Debt

Debt with no asset attached to it. Examples include credit cards, unsecured lines of credit, and personal loans. Most non-profit credit counselling solutions focus on unsecured debt.

Secured Debt

Debt guaranteed by collateral tied to an asset. Examples include mortgages and home equity lines of credit. If you stop making payments on secured debt, the lender can pursue the asset the debt is tied to, including forcing the sale of your home.

Government Debt

Debt owed to the government. Examples include income taxes, student loans, medical premiums, and provincial insurance. Government debt has different repayment rules, and some debt relief options do not apply to it in the same way. This will be clarified when each option is discussed.

Not Sure What Kind of Debt You Have or How Much You Owe?

Requesting your credit report from both Equifax (equifax.ca) and TransUnion (transunion.ca) gives you a complete picture at no cost. A Credit Counselling Society counsellor can also walk through this with you during a free appointment.

Get a Free Financial Assessment

[8:33] Step One: Take an Inventory of Your Debts

Before exploring any debt relief option, you need a clear snapshot of your complete financial picture. This means listing every debt you carry, including:

• The type of debt (unsecured, secured, or government)
• The current balance
• The minimum monthly payment
• The interest rate

You can do this on paper, in a spreadsheet, or by downloading the free budget spreadsheet available at nomoredebts.org. If you are not sure what debts you have, request your credit report from both Equifax at equifax.ca and TransUnion at transunion.ca. Both reports are available for free online.

Having this inventory in hand makes every conversation with a credit counsellor faster and more productive, and it helps you understand which solutions are available to you.

[10:19] The Three Categories of Debt Relief

There are three broad categories of options for dealing with debt.

Option 1: Handle It Yourself
Self-directed strategies you can implement on your own, including budgeting, expense tracking, selling assets, and structured repayment methods.

Option 2: Work With a Non-Profit Credit Counselling Agency
Organizations like the Credit Counselling Society provide free, confidential counselling and can facilitate structured debt relief programs, including Debt Management Programs and debt settlement.

Option 3: Legal Options
Consumer proposals and bankruptcies are administered through a licensed insolvency trustee. The Credit Counselling Society does not offer these services directly, but will discuss them openly with you so you can make an informed decision.

[11:02] Signs It May Be Time to Ask for Help

Ask yourself:

• Am I regularly going into overdraft?
• Am I using credit to cover emergencies or everyday living expenses?
• Am I stressed about money more often than I would like?
• Have I been declined by my financial institution?
• Am I late on payments or unable to catch up?
• Am I receiving collection calls?
• Am I considering payday loans?
• Is financial stress affecting my health or sleep?

If any of these resonate, this workshop and a follow-up conversation with the Credit Counselling Society can help you find a clear path forward.

Are These Signs Familiar?

If you are regularly in overdraft, relying on credit for basics, or receiving collection calls, the Credit Counselling Society can help. A free appointment with one of our certified counsellors will give you a clear picture of where you stand and what your options are, with no judgment and no obligation.

Talk to a Counsellor for Free

[12:10] Option 1: Self-Directed Debt Repayment Strategies

If you want to handle your debt independently, there are several practical approaches to consider.

Step 1: Review and Adjust Your Budget

Look at your monthly income and expenses and identify where you can free up money to put toward debt repayment. A free budget spreadsheet is available at nomoredebts.org to help you get started.

Step 2: Track Your Expenses

A budget is a plan. Tracking is how you confirm reality matches the plan. Recording where your money actually goes each month helps you identify leaks and redirect funds toward debt.

Step 3: Cut Expenses and Increase Income

Any surplus you can create, whether by spending less or earning more, can be directed toward paying down debt faster.

Step 4: Consider Selling Assets

Could you downsize your home, sell a vehicle, or sell recreational property, art, jewellery, or other valuables? Using the proceeds to pay down debt can dramatically shorten your repayment timeline.

Step 5: Communicate With Your Creditors Early

If you are struggling, contact your creditors before you miss a payment. The earlier you reach out, the more options they are likely to offer, including lower interest rate products, consolidation loans, lines of credit, or mortgage refinancing. Once you are already behind, those doors close quickly.

[15:05] Repayment Methods: Avalanche vs. Snowball

Once you have created a monthly surplus, there are two structured approaches to applying it toward your debts.

The Debt Avalanche Method
Focus your extra payments on the debt with the highest interest rate first, while making minimum payments on all other debts. Once the highest-interest debt is paid off, roll that payment amount onto the next highest-interest debt and continue until all debts are cleared.

The benefit: you pay less total interest and get out of debt faster.

The Debt Snowball Method
Focus your extra payments on the debt with the lowest balance first, regardless of interest rate, while making minimum payments on all others. Once the smallest debt is eliminated, roll that payment onto the next smallest balance.

The benefit: you get quick wins that build motivation and momentum.

Both methods work. The debt avalanche saves the most money. The debt snowball builds the most psychological momentum. Choose based on what will keep you consistent.

[19:23] Option 2: Working With a Non-Profit Credit Counselling Agency

If self-directed approaches have not been enough, or if you have already spoken with your financial institution and been declined or are falling further behind, the next step is to speak with a non-profit credit counselling agency.

What to look for in a credit counselling agency:

• Is the organization non-profit?
• Is it accredited, and by whom?
• What training do its counsellors complete?
• Are there fees, and if so, what are they for?
• Does it have a Better Business Bureau rating or verifiable Google reviews?

What to expect from a counselling appointment:
Appointments can be done in person or by phone. A reputable counsellor will conduct a full financial analysis covering your income, assets, liabilities, monthly expenses, and debts. If that does not happen, it is a red flag. The purpose of the analysis is to identify every option available to you and discuss the pros and cons of each one honestly.

The Credit Counselling Society’s Debt Relief Programs:

Debt Management Program (DMP)

A voluntary repayment agreement between you and your creditors, facilitated by the Credit Counselling Society. Under a DMP, interest is reduced or eliminated, and unsecured debts are consolidated into a single, manageable monthly payment. It does impact your credit temporarily, both during the program and for a period after it is completed.

Debt Settlement Program

An offer is made to your creditors to repay a percentage of what you owe as a lump sum. This can be done independently or with the assistance of the Credit Counselling Society. If doing it independently, always get the settlement agreement in writing from the creditor before making any payment. If navigating this on your own feels uncertain, working with a non-profit organization is the recommended path.

Want to Know If a Debt Management Program Could Work for You?

The Credit Counselling Society has helped thousands of Canadians consolidate and repay debt through the Debt Management Program. A free counselling appointment will tell you whether you qualify and what your monthly payment would look like.

Find Out If a DMP Is Right for You

[22:27] Option 3: Legal Debt Relief Options

The Credit Counselling Society does not provide legal debt relief services directly, but we discuss these options openly so you can make a fully informed decision. If a legal option is the right path for you, we will tell you that.

Consumer Proposal

A legal process administered by a licensed insolvency trustee. You repay a negotiated portion of your total debt through fixed monthly payments over a set period of time. A consumer proposal can include some government debts. It does negatively impact your credit and leaves a permanent record. Fees apply.

Bankruptcy

Also administered through a licensed insolvency trustee. Bankruptcy provides relief from debts you are unable to repay. It requires surrendering certain assets, may involve ongoing payments, negatively impacts your credit for a longer period than a consumer proposal, and also leaves a permanent record. Fees apply.

Both legal options are significant decisions with long-term consequences. Speaking with a Credit Counselling Society counsellor first ensures you have explored every alternative before making that choice.

[25:02] If You Have Already Decided to Start Paying Down Debt: Key Reminders

• Stop using credit and switch to cash or debit while repaying. Adding to your debt load while trying to eliminate it makes the goal nearly impossible.
• If you are still struggling to make payments, communicate with your creditors. Do not go silent.
• Understand which of your assets are at risk. If a secured debt, like a mortgage, goes unpaid, the lender can pursue the asset it is tied to.
• Be aware of the right of offset. If you owe money to a bank where you also hold deposits, that bank may have the legal ability to withdraw funds from your accounts without advance notice to recover what is owed.
• Know your provincial statute of limitations for debt. Time limits on how long a creditor can pursue legal action vary by province.

About the Credit Counselling Society

The Credit Counselling Society is a registered Canadian non-profit organization that has helped more than one million Canadians since 1996. We are accredited, trusted, and committed to providing free, judgment-free support to anyone who needs help with debt, budgeting, or financial planning.

We provide:

• Free credit and debt counselling
• Low-cost debt solutions, including debt management programs
• Financial education workshops and webinars
• Budgeting tools and calculators
• Resources to help Canadians improve their long-term financial well-being

Our mission is simple: We Help. We Educate. We Give Hope.