Empower Your Financial Future
An Alternative Approach
Credit Counselling is a financial education and debt management service offered by non-profit and for-profit agencies. Unlike a Consumer Proposal or Bankruptcy, which are formal, legally-binding processes under the Bankruptcy and Insolvency Act (BIA), credit counselling is an informal process focused on financial education and managing debt repayment.
What is Credit Counselling?
Credit Counselling typically involves meeting with a certified Credit Counsellor who reviews your financial situation, helps you create a budget, and provides education on money management. The most common solution offered is the Debt Management Plan (DMP).
The Debt Management Plan (DMP)
A DMP is a voluntary agreement facilitated by the credit counselling agency between you and your unsecured creditors.
Key Features of a DMP:
- Consolidated Payment: You make one monthly payment to the credit counselling agency, and they distribute the funds to your creditors.
- Interest Reduction: Creditors, on a voluntary basis, often agree to reduce or freeze the interest rate on the debt included in the DMP (e.g., credit cards, lines of credit).
- Full Repayment: Unlike a Consumer Proposal, a DMP requires you to repay 100% of the principal debt owed.
- Duration: DMPs typically last four to five years.
- No Legal Protection: Since a DMP is voluntary and informal, there is no “stay of proceedings.” If a creditor refuses to participate or if you miss payments, they can resume collection efforts, including lawsuits or garnishments.
At Dean Debt Solutions, we are dedicated to providing comprehensive credit counselling services to help individuals and families achieve financial stability. Our team of certified professionals works diligently to offer personalized advice and effective debt management plans. We understand the stress that debt can bring, and our mission is to empower our clients with the knowledge and tools necessary to make informed financial decisions. By focusing on education and support, we aim to guide you towards a debt-free future, ensuring peace of mind and financial security.
Ready to Take Control of Your Finances?
Budgeting Assistance
Our budgeting assistance service helps you create a realistic and sustainable financial plan, ensuring you can manage your expenses while working towards debt reduction.
Debt Management Plans
We offer customized debt management plans designed to consolidate your debts into manageable payments, reducing interest rates and eliminating late fees.
Credit Score Improvement
Our experts provide guidance on improving your credit score, offering strategies to address negative items and build positive credit history.
Comparison: DMP vs. Consumer Proposal
Feature |
Debt Management Plan (DMP) |
Consumer Proposal |
|---|---|---|
| Legal Status | Voluntary, informal agreement | Formal, legally binding process (BIA) |
| Debt Repayment | 100% of principal debt | Portion of debt (often significantly less than 100%) |
| Interest | Creditors may agree to reduce or freeze interest | Interest is automatically stopped upon filing |
| Asset Impact | No impact on assets | Debtor retains all assets |
| Legal Protection | None; creditors can sue/garnish | Immediate Stay of Proceedings (stops garnishment/lawsuits) |
| Credit Impact | R-3 rating while active; usually removed shortly after completion | R-7 rating while active; removed 3 years after completion |
| Administrator | Credit Counselling Agency | Licensed Insolvency Trustee (LIT) |
Comparison: Consumer Proposal vs. Bankruptcy
Feature |
Consumer Proposal |
Bankruptcy |
|---|---|---|
| Duration | Up to 5 years (maximum) | First-time: 9 or 21 months |
| Asset Impact | Debtor retains all assets | Non-exempt assets are sold to pay creditors |
| Payments | Fixed monthly payment based on the proposal amount | Fixed cost + Surplus Income payments (if applicable) |
| Credit Rating | R-7 rating; removed 3 years after completion | R-9 rating; removed 6 years after discharge |
| Cost | Principal + LIT Fees (paid out of the principal) | Fixed amount + Surplus Income (paid in full) |
| Public Record | Yes, recorded on public record | Yes, recorded on public record |
When to Consider Credit Counselling
Credit Counselling and a DMP are generally appropriate if:
- Your debt is manageable, and you can afford to repay 100% of the principal within 4-5 years.
- Your creditors are likely to agree to the interest reduction (DMPs are highly reliant on creditor participation).
- You require financial education and budgeting assistance.
- You are not facing immediate legal action (like a lawsuit or wage garnishment) that requires the immediate protection of a Stay of Proceedings.
Common Questions About Credit Counselling
Discover answers to the most common questions about our credit counselling services to help you make informed decisions.
