In a Nutshell: For the past 20-plus years, Canadians with financial difficulties have found effective solutions through the Credit Counselling Society. The nonprofit organization provides personalized analysis of a borrowerâs financial situation and helps them craft a plan to become debt-free on their own terms. These plans emphasize budgeting to manage debt and saving as a means of avoiding further debt in the future. For clients with extensive debt, the Credit Counselling Society offers a Debt Management Program that consolidates payments, negotiates to have interest fees waived, and helps people avoid bankruptcy. With the help of the societyâs professional counselors, Canadians can explore all their options and find the most favorable path to financial health and peace of mind.
Phyllis, a resident of the Vancouver area, was looking forward to retiring at age 65 â until she realized she owed $85,000 on 11 credit cards.
Unable to consolidate her debts through her bank, she turned to the Credit Counselling Society, where a counselor helped her build a budget and plan her expenses based on her personal goals. Now, thanks to a Debt Management Program (DMP), Phyllis is back on track to retire debt-free.
Phyllisâ ordeal is just one example of Canadaâs rising debt problem. And itâs one case out of tens of thousands in which the Credit Counselling Society was able to provide relief to someone struggling with debt.
The Credit Counselling Society offers free educational resources at two websites â NoMoreDebts.org and MyMoneyCoach.ca â for those who want to improve financial literacy and money management skills.
But for Canadians facing immediate financial difficulty, it also provides free counseling services. These include individual analysis of a personâs debt; an explanation of the various options for resolving the situation and the implications of each; and coaching on budgeting and personal finance. For those who need it, a DMP offers an alternative to filing for bankruptcy.
âSince our inception in 1996, weâve sat down with over half a million Canadians to do one-on-one counseling sessions,â said Scott Hannah, President of the Credit Counselling Society. âWeâve helped clients who have established a repayment program through our society repay $400 million of debt and counting.â
Specialized Service to Help Canadians Understand Their Financial Options
When someone comes in with a case of financial difficulty, the Credit Counselling Society starts by examining all of the details of the personâs situation.
âEveryoneâs unique, so while there may be some similarities between their situation and those of other consumers, we recognize that when a person is going through financial difficulty â especially for the first time â itâs a new experience for them,â Hannah said. âSo we treat it as a new experience.â
This approach helps both the counselor and client understand whatâs wrong and how to fix it. âWe look at a consumerâs entire financial picture,â Hannah said. âHow much income is coming in? What are their monthly expenses? What do they own? Who do they owe money to? What brought them to our organization? What was it that motivated them to say, âI now need helpâ?â
However, many clients are reluctant to fully disclose these and other details, fearing judgment for their poor money management. Hannah told us theyâll often bring a friend or family member to provide moral support in early sessions. âWe encourage that,â he said. âUntil it gets to the point where a person is willing to trust us, itâs challenging to make progress.â
To get to that point, counselors move at the clientâs pace. âWe donât rush individuals,â Hannah said. âWe go as slow or as fast as they want to go. We find that, with some people, in a first appointment, we get a certain level of information from them. We give them some things to think about and schedule another appointment.â Over time, counselors build trust and rapport with the client, and the client is able to eventually share the full scope of their financial troubles.
âOftentimes, having debt is not the problem. Itâs a symptom of the problem,â Hannah said. âAnd so we really have to get down to the core of it. Is it a spending problem? Is it the fact that your expenses consistently exceed your income? Is your income fluctuating at times?â
Determining the source of a clientâs financial troubles is the only effective way of addressing those troubles; otherwise, the counselor can only treat the financial symptoms. âWhen we get down to the root of the problem and address that, everything else falls into order pretty quickly,â Hannah said. âYou find the right solution for a person that they can manage.â
Once a counselor understands the problem, they can then help clients explore their options for resolving it.
âWe help people understand all the various options they could look at and the implications of those options,â Hannah said. âAnd thatâs really important. When the average person comes to us in financial difficulty, their world is a little topsy-turvy.â
Thankfully, the Credit Counselling Society provides an objective, outside perspective on financial trouble. âWe help you to take yourself out of how youâre feeling today and look at where you want to be down the road,â Hannah said. âYou want to be in control of your money again. You want to have addressed your debt situation. So we talk about those different solutions and also the positives and negatives of different courses of action.â
The Credit Counselling Society seeks to provide clients with enough flexibility to choose the solution that is best for their personal situation. âWhen they have a complete understanding of the implications, advantages, and disadvantages,â Hannah said, âtheyâre in a better position to say, âThis is what I think is right for me.ââ
Careful Budgeting and Saving Form the Foundation of Financial Health
The Credit Counselling Society emphasizes budgeting and saving as crucial components of any client solution.
âWe always look to incorporate some form of saving, so when unexpected expenses come along, youâve got some cash to be able to do that,â Hannah said. âThatâs one of the biggest stumbling blocks we see for consumers today who are serious about paying off their debt. They try to do the best they can, but theyâre not saving any money. Therefore, they always get tripped up when an unexpected expense comes along, and then they get frustrated and just give up.â
Counselors help clients account for these blind spots when budgeting and saving. For example, anyone who owns a car will have repair and maintenance costs. The same is true for people who own homes. âWhile you wonât have those expenses each and every month, they will come up,â Hannah said, âand itâs important to set those funds aside, so when they come up, you can manage them.â
Hannah told us this isnât how many Canadians are accustomed to managing their money. âThatâs a real shift for a lot of people who have gotten used to paying for everything month by month,â he said. âItâs like with car insurance. A lot of people pay their car insurance on a monthly basis as opposed to setting money aside, paying it once per year, and not having to pay interest on top of car insurance costs.â
By helping clients develop healthy financial habits like these, counselors also help them enjoy greater financial security and peace of mind.
Debt Management Programs Help Consumers Reduce Interest and Avoid Bankruptcy
For those facing serious debt, a DMP can be a great option for simplifying debt and reducing interest.
âSome people, who arenât in a position to reorganize their debts through a conventional bank or credit union but canât keep up with minimum monthly payments, may come to us and ask our help to reorganize their debts under a program that we call our Debt Management Program,â Hannah said. âFor a lot of people, what theyâre really thinking about is, âI need to have one payment that fits my budget.â And thatâs really what our Debt Management Program is.â
The program consolidates clientâs monthly payments through the Credit Counselling Society, which negotiates with creditors to arrange manageable payments and waive interest. âWe have relationships with all national, regional, and local creditors. So when someoneâs in financial difficulty, we can restructure their debts. The consumer makes one monthly deposit to our organization in trust, and in turn, we disburse those funds to the creditors,â Hannah said. âEveryone gets a proportionate share.â
These agreements remain in place as long as the client meets monthly payments on outstanding debts. âTypically, when someone enters that type of a program, theyâre able to pay off their debt, on average, within 3.5 years, although it could be extended up to a maximum of five years,â Hannah said. âBut itâs because of the interest relief theyâve received that theyâre able to make real progress in paying off their debts.â
Unlike counseling, this service does incur a fee. âFor the most part, there are some small costs associated with the Debt Management Program,â said Hannah. âThe average client whoâs on a program pays a monthly fee of, on average, about $33.â
If the client canât afford the payment, the Credit Counselling Society will waive it; but thanks to their efforts, clients often enjoy a net gain. âThe average consumer saves over $5,000 worth of interest each year,â Hannah said.
All told, the Debt Management Program is a better alternative to bankruptcy for everyone involved. The institutions owed receive repayment in a timely manner, rather than none at all. Meanwhile, Canadians can efficiently clear their debt and move on to a financially sustainable lifestyle.
The First Step on the Road to Financial Recovery
Because Phyllis had so many credit cards, she didnât realize the magnitude of her debt. And because her debt had grown so large, she couldnât manage it on her own. Realizing the problem, she took immediate action, which is the smartest choice a consumer can make.
âPeople should get help at the first sign of financial difficulty. Oftentimes, there are little signals that come along that they may not recognize initially, but theyâre there,â Hannah said. âThe best thing a person can do when they recognize that is to get help.â
Help may take the form of seeking advice from a friend or family member. Thanks to the anonymity the internet provides, many will look for information and solutions online. But, in dire financial straits, self-help can only go so far.
âItâs very much like those who try to self-diagnose health problems,â Hannah said. âHealth professionals will say not to do that. Itâs the same thing with someone suffering from financial problems. Donât self-diagnose. Get some help from a professional.â
The professionals at the Credit Counselling Society are standing by to help anyone facing financial difficulty. With 23 offices across Western Canada and Ontario, counselors can aid Canadians in solving their money problems by helping them develop healthy financial habits so they enjoy a life free from monetary worry.
Advertiser Disclosure
BadCredit.org is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free for users, we receive advertising compensation from the financial products listed on this page. Along with key review factors, this compensation may impact how and where products appear on the page (including, for example, the order in which they appear). BadCredit.org does not include listings for all financial products.
Our Editorial Review Policy
Our site is committed to publishing independent, accurate content guided by strict editorial guidelines. Before articles and reviews are published on our site, they undergo a thorough review process performed by a team of independent editors and subject-matter experts to ensure the contentâs accuracy, timeliness, and impartiality. Our editorial team is separate and independent of our siteâs advertisers, and the opinions they express on our site are their own. To read more about our team members and their editorial backgrounds, please visit our siteâs About page.