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What is Credit Counseling in Canada

Updated on August 6, 2015

What is Credit Counseling?

It is a plan of action that is set up for you to help you gain control of your financial situation.

Credit Counseling will get creditors off your back and help you to start paying down your debt in a way that is more manageable for your monthly budget. If you are trying to carry a large amount of debt you can find yourself in an awful position. When you only pay the minimum payment on credit cards and other high interest loans you could soon find youself overcome with interest charges.

Stretching your budget to thin trying to pay debtors can cause bad side effects on your entire life. It can effect how you feel about yourself and your loved ones. The stress that goes along with an overly tight budget can be very harmful to your health and general well being.

We all make mistakes in life and it is very easy now adays to make bad credit choices. Credit Counseling in Canada is in place to help us fix those unfortunate financial mistakes.

Orderly Payment Of Debt
Orderly Payment Of Debt

Orderly Payment of Debts

Credit Counselling can vary from province to province. One option that is available to Alberta, Saskatchewan, PEI and Nova Scotia is Orderly Payment of Debts(OPD), with the help of a credti counsellor you may apply for a Consolidation Order.

How does this work? The OPD program is a program run by non profit organizations that allows you to pay your debts back entirely over a period of time. There are advantages to using the OPD program in your province. Interest rates can be dropped to 5% on all unsecured debts that you include in your OPD,

Advantages to the Orderly Payment of Debt Program

  • Interest rates on unsecured debt included in the OPD may be dropped to 5%.
  • Creditors no longer contact you. Instead you direct them to your credit counsellor for information.
  • A legal stay of proceedings is put in to action. This will basically stop creditors from sueing you.
  • You will have one payment to make and the credit counsellor will divide this monthly payment amongst all your creditors.

The OPD program is best suited for people that are able to complete it in 3 years or less. If you are not able to repay you rdebt in this amount of time you may do more damage then good. When considering whether the OPD program is a good option for you keep in mind that you will be makin ghtese payments for at least the next 3 years. You do not want the OPD payments make your budget to tight or you may run in to problems. The penalties for defaulting on an OPD can be very severe.

When considering your options it is best to consult with a credit counsellor such as Credit Counselling Canada and speak with a bankruptcy trustee in your area. By talking to both you will be informed of all disadvantages and advantages to each program.

Consumer Proposal
Consumer Proposal

Consumer Proposals

Consumer proposal is a step away from bankruptcy. It gives you the opportunity to partially pay back your debts. In order for a consumer proposal to be accepted it must put your creditors in a better position than what bankruptcy would. When you file a consumer proposal it is similar to filing bankruptcy, most of the paperwork will be the same. This gives your creditors a chance to make a comparison of the benefits to them if you were to file a consumer proposal instead of filing bankruptcy.

Advantages to Filing a Consumer Proposal

  • It allows you to pay your creditors back more then they would get if you filed bankruptcy.
  • It is a little easier on your credit.
  • A stay of proceedings is put in place from the day you file. This stops your creditors from actively pursueing the debt you owe them.
  • Interest rates may be dropped to 0%.

To get started with a consumer proposal you will file a statement that explains your financial situation in detail and tells them what you can reasonably afford to pay back.

If this option is right for you, the process starts by filing a statement of affairs with a trustee. The statement of affairs tells the creditors exactly what your finances are like at this particular time and shows them what you can reasonably afford to pay them back.

Your creditors will then have a chance to vote in favor or against your consumer proposal and request court approval. If your creditor vote against your proposal you will then have 2 options. You can walk away from the whole proposal or you can make changes to it that will help the creditors to vote for it.

When choosing which financial options are best for you it is important to get all the proper information. Talk to a credit counsellor such as the people at Credit Counseling Canada

Personal Bankruptcy in Canada

Bankruptcy is an extreme way to deal with your debts. Before considering bankruptcy be very sure you have researched all other options. Such as OPD and Consumer Proposals.

In order to file for personal bankruptcy in Canada you must owe more then $1000 and be unable to pay your bills when they are due.

To start bankruptcy you must sign all of your assests over to a trustee. There are exemptions such as clothing and personal effects, one vehicle, household furniture and appliances along with other exemptions that you can discuss with a trustee. To begin this process you must make an assignment into bankruptcy. At this time you are assigning all of your assets over to a trustee for liquidation to the general benefit of your creditors. It will be your responsibility to deliver all items that are not exempt to the trustee. You will also need to provide tax information from the beginning of your bankruptcy through to discharge. Any refund amount you may get from your taxes will go to your trustee.

You will also be required to go to 2 counselling sessions before the nine months is over. These sessions are designed to help you build your budgeting skills and to help you better care for your finances. Throughout the bankruptcy you will have to file monthly statement of income and expenses. This is designed to help you keep track of your money and your expense habits. There are fees involved in a bankruptcy such as the trustees fees and excess income fees. The excess income fee applies if you are other the guidelines for what your family is alowed to make. The trustee will disuss these guidelines with you. When you are over the guideline you will need to give half of the excess amount to the trustee to go to your creditors.

Advantages to a Bankruptcy

  • A legal stay of action is put into effect from the day you file. This will stop creditors from pursueing the debt you owe.
  • You are discharged after nine months.
  • Once you are discharged all debts are leagally forgiven. There are a few exceptions to which debts are not included.
  • You may begin to rebuild your credit after you are discharged.

Bankruptcy is not the only option you have but it may the best option for your situation. Do not let bankruptcy get you down. We all need a do over at some point in life and sometimes that do over just happens to be with our finances.


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    • profile image


      6 years ago

      The CCSA changed their name to Money Mentors a few years ago but still offer the OPD program in Alberta

    • profile image


      6 years ago

      I know some people that have done a consumer proposal and got thousands taken off of their debt. Does anyone know how long something like this stays on you credit report. I was on a site called to see if I could reduce my debt. Thanks for the great article!

    • Amy Peters profile image

      Amy Peters 

      6 years ago

      I didn't know that there are so many different types of credit counselling in Canada. I really like the way the Orderly Payment of Debts programs works. That seems like it would be a really useful type of debt help. I wish it would get broadened to include more of the provinces. Or at least that that style was easy to find in other locations. ( )

    • profile image

      Assad Syed 

      9 years ago

      I got 2-jobs in my native country (Pakistan) in mid of 2005, so got about 60,000 dollars from credit cards/lines of citibank, royal bank and many others and decided to move to pakistan for 3-years. I had a plan that i will buy house in pakistan and than from 2 jobs here keep returning credit money every month. But on 14 may 2005 just before take off, my son got an accident in calgary with serious wounds and hospitalized in calgary children Hospital for some days. Meanwhile i got job in Walmart calgary and kept returning credit loans to some extend but this was not enough for comfort return. I lost one of my jobs in pakistan due to 3-months delay. I kept falling into economic crises and finally decided to return to pakistan after 3- months delay. I got only one job here in pakistan where I make only about $600 per month which is not enough to recover credit problems. Now I feel guilty and wether or not I come back to Canada I want to get rid of my economic worries. Please let me know if i declare Bankruptcy what type problems will I face in canada in future. Can i process from here with your help. I used to live at 204 Greer Court regian for about one & half years i-e from Dec 2003 to May 2005. Befor that I lived at Calgary from April 2000 to Dec 2003. I am mentally upset please guide me for relief. Thanks. from Assad Syed pakistan


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