What is Credit Counselling in Ontario?

What is credit counselling in Ontario?

Credit counselling in Ontario is a professional service provided by certified counsellors at non-profit agencies. It covers budgeting help, debt education, and structured repayment options for people who are falling behind on unsecured debts like credit cards, personal loans, and lines of credit.

The Financial Consumer Agency of Canada (FCAC) recommends credit counselling as a first step for anyone having trouble keeping up with payments.

Source: Financial Consumer Agency of Canada – Getting help from a credit counsellor

Non-profit credit counselling agencies in Ontario are accredited through Credit Counselling Canada (CCC) or the Canadian Association for Financial Empowerment (CAFE), which administers the Accredited Financial Counsellor Canada (AFCC) and Certified Financial Counsellor (CFC) designations.

A credit counsellor reviews your income, expenses and debts, then explains your options, from budgeting adjustments to a formal Debt Management Plan or a referral to a Licensed Insolvency Trustee.

How does the credit counselling process work in Ontario?

Credit counselling in Ontario follows four steps. The process typically takes one to two weeks from your first call to an active plan, though the initial consultation itself lasts about 60 to 90 minutes.

The four steps

1. Book a free consultation. Contact a non-profit credit counselling agency accredited by Credit Counselling Canada or CAFE. The first session is free, confidential, and has no effect on your credit score.

2. Complete a financial assessment. The counsellor reviews your income, monthly expenses, and all outstanding debts. The counsellor may also request a soft credit pull, which does not affect your score. There is no commitment at this stage.

3. Review your options. If your debts are manageable with interest relief, the counsellor recommends a Debt Management Plan (DMP). If your debts are too high or your income too low for a DMP, the counsellor refers you to a Licensed Insolvency Trustee to discuss a consumer proposal or bankruptcy.

4. Enroll in a plan or follow through on the referral. If a DMP is the right fit, you sign an agreement with the agency. The agency contacts your creditors, negotiates interest relief, and sets up your consolidated monthly payment. If the counsellor refers you to a trustee, book that consultation next.

Source: Financial Consumer Agency of Canada – Getting help from a credit counsellor

Both non-profit and for-profit organizations offer credit counselling, so verify accreditation before enrolling.

What does a Debt Management Plan through credit counselling include?

A Debt Management Plan (DMP) is the main repayment program offered through credit counselling in Ontario. It is an informal proposal your credit counsellor makes to your creditors on your behalf.

The agency negotiates with each creditor to reduce or eliminate interest on your unsecured debts. You make one consolidated monthly payment to the agency, and the agency distributes the funds to your creditors according to the plan. The maximum repayment term is 60 months, and you repay 100% of the amount owed.

Not every creditor has to agree. If a creditor declines the DMP, the counsellor will suggest you make payment arrangements directly with that creditor.

Creditors can also still use collection agencies during a DMP, because the plan is not legally binding. That is the main difference between a DMP and a consumer proposal. A DMP is voluntary, whereas a consumer proposal binds all creditors once a majority of creditors accept it.

Source: Financial Consumer Agency of Canada – Getting help from a credit counsellor

How much does credit counselling cost in Ontario?

Credit counselling in Ontario starts with a free consultation. Non-profit agencies do not charge for that first session, and many offer ongoing budgeting and financial education at no cost.

Fees apply if you enrol in a Debt Management Plan. As of 2026, non-profit agencies typically charge an administration fee based on a percentage of your monthly DMP payment, plus a potential setup fee. These fees vary by agency, so ask for a complete breakdown before you sign anything.

The FCAC recommends comparing the agency’s fees with the interest you save under the DMP. If the fees are higher than the interest savings, a DMP is not the right option.

Source: Financial Consumer Agency of Canada – Getting help from a credit counsellor

For-profit credit counselling firms have different fee structures and are not bound by the same accreditation standards. Always ask about total costs upfront, and stick with a non-profit agency accredited by Credit Counselling Canada or CAFE.

Enrolling in a Debt Management Plan

If you enrol in a DMP, each account included in the plan receives a “7” payment rating on your credit report. It means you are making agreed-upon payments through a debt relief program. On revolving credit accounts like credit cards, this appears as R7.

Equifax Canada’s rating system also defines I (instalment), O (open), C (line of credit), and M (mortgage) as separate account types that use the same 0-9 scale. In theory, an instalment loan included in a DMP would carry an I7 rating. In practice, almost every source refers only to R7, likely because credit cards and other revolving accounts make up the bulk of unsecured debt in these programs.

Equifax’s credit report system also flags these arrangements with specific codes in the public records section of your report. CDC (consumer debt counselling) identifies a DMP, while PR/BK (proposal under bankruptcy) identifies a consumer proposal, and CRCLD (court consolidation) identifies a court-ordered debt consolidation.

Source: Equifax Canada – Consumer Credit Report User Guide, 2017

The R7 notation stays on your report for two years after you complete the plan, or six years from the date of default on the original debt, whichever comes first.

How does that compare to other debt relief options?

A consumer proposal also results in an R7 credit rating on each revolving account included in the agreement. The same “7” code applies across account types, but R7 is the rating you will see referenced most often. A consumer proposal remains on your credit report for three years after completion or six years from filing, whichever is sooner. Bankruptcy results in an R9 rating, the most severe, and stays on your report for six to seven years after discharge.

The credit impact of a DMP and a consumer proposal is similar at the account level, but a consumer proposal costs less each month because you repay only a portion of the total debt.

How do you find a legitimate credit counsellor in Ontario?

Credit counselling in Ontario is not a regulated title. Anyone can call themselves a credit counsellor. That means you need to check credentials yourself.

What to verify

Look for membership in Credit Counselling Canada (CCC), which requires agencies to be non-profit, maintain accreditation standards, and ensure all counsellors hold a professional designation. CCC does not allow counsellors to be paid on commission, which helps keep advice objective.

The Canadian Association for Financial Empowerment (CAFE), formerly the Ontario Association of Credit Counselling Services (OACCS) and the Canadian Association of Credit Counselling Services (CACCS), administers the CFC and AFCC designations. CAFE sets agency accreditation standards in Ontario through the Canadian Centre for Accreditation.

Red flags

Be wary of any agency that charges upfront fees before providing services, guarantees specific results, or pressures you to sign immediately. The FCAC warns that some for-profit companies mislead consumers by offering to help pay off debt or repair credit.

If something feels off, walk away. There are enough legitimate non-profit agencies in Ontario that you do not need to settle.

If a counsellor only recommends one option without explaining the alternatives, that is a red flag too. A legitimate counsellor covers everything from budgeting adjustments to a DMP to a referral to a Licensed Insolvency Trustee.

Source: Financial Consumer Agency of Canada – Getting help from a credit counsellor

What is the difference between credit counselling and a consumer proposal in Ontario?

Credit counselling and a consumer proposal both deal with unsecured debt in Ontario, but they work differently and suit different situations.

A DMP through credit counselling requires you to repay 100% of the principal owed, with interest reduced or eliminated. It is voluntary for creditors, meaning they can decline to participate or withdraw. The plan is administered by a non-profit credit counselling agency and is not filed with any court.

A consumer proposal reduces the total amount of debt you owe. It is a legal process under Part III, Division II of the Bankruptcy and Insolvency Act (BIA) and is filed through a Licensed Insolvency Trustee.

Once a majority of creditors accept a consumer proposal, it is binding on all unsecured creditors. A consumer proposal is available for unsecured debts under $250,000, excluding the mortgage on your principal residence.

Source: Bankruptcy and Insolvency Act, Part III Division II

Both result in an R7 credit notation. The practical difference is cost. A DMP has you pay back everything you owe, while a consumer proposal typically settles for less.

	Debt Management Plan	Consumer proposal	Bankruptcy
Amount repaid	100% of principal	Portion of total debt	Portion of debt (via surplus income)
Interest	Reduced or eliminated	Stopped completely	Stopped completely
Creditor agreement	Voluntary	Legally binding once majority accepts	Legally binding
Administered by	Non-profit credit counselling agency	Licensed Insolvency Trustee	Licensed Insolvency Trustee
Legal protection from creditors	None	Full stay of proceedings	Full stay of proceedings
Tax debt included	No	Yes	Yes
Maximum term	60 months	60 months	9 or 21 months (first time)
Credit notation	R7 for 2 years after completion	R7 for 3 years after completion	R9 for 6 to 7 years after discharge

What types of debt can credit counselling in Ontario help with?

Credit counselling in Ontario and the DMP program cover most unsecured debts. That includes credit card balances, personal loans, unsecured lines of credit, overdue utility bills, and some collection accounts.

DMPs do not cover secured debts, such as mortgages or car loans. They also do not typically cover student loans, payday loans (most payday lenders refuse to participate in DMPs), or tax debts owed to the Canada Revenue Agency (CRA).

If CRA tax debt or student loans make up most of what you owe, a consumer proposal is more appropriate. A consumer proposal can include tax debts and, in most cases, student loans if you have been out of school for more than seven years.

When should you consider credit counselling instead of other debt relief options?

Credit counselling in Ontario and a DMP are the right fit when you can afford to repay 100% of the principal within five years, provided your creditors agree to reduce or eliminate the interest. As a rough guide, if your total unsecured debt is under $20,000 and you have a steady income, a DMP is worth looking at.

If your unsecured debts exceed $20,000 and full repayment within five years is not realistic, even without interest, a consumer proposal or bankruptcy through a Licensed Insolvency Trustee is a more sensible option. The same applies if key creditors refuse to participate in a DMP, since the plan has no legal mechanism to compel them.

Here is the simplest test. Remove the interest from your debts and divide the remaining balance by 60 months. If you can afford that monthly payment, credit counselling works. If you cannot, you need a different solution.

Why is demand for credit counselling rising in Ontario?

Credit counselling in Ontario is getting more attention as household debt across Canada continues to climb. As of Q3 2025, the household debt-to-income ratio reached 176.7%. That means Canadians owe $1.77 for every dollar of disposable income.

Source: Statistics Canada – National balance sheet and financial flow accounts, Q3 2025

Ontario still has the highest volume of consumer insolvencies of any province. As of October 2025, 52,128 Ontarians filed for insolvency over the trailing 12 months, up 2.1% from the same period a year earlier. The pace has slowed from the 2024 spike of 17.8%, but the raw numbers keep climbing.

Consumer proposals accounted for 81.3% of all consumer insolvencies in Ontario, compared to 78.6% nationally.

Source: Office of the Superintendent of Bankruptcy Canada – Insolvency Statistics, October 2025

Mortgage renewals at higher rates, rising living costs, and a cooling job market are all part of the picture. Most people do not know about credit counselling until the sums stop adding up.

Frequently asked questions

Is credit counselling in Ontario free?

Your first consultation with a non-profit credit counselling agency is free. If you enrol in a Debt Management Plan, the agency charges an administration fee based on a percentage of your monthly payment. There is sometimes a small setup fee as well.

Fees vary by agency. Non-profit agencies affiliated with Credit Counselling Canada or CAFE must be transparent about all costs before you commit.

Will credit counselling affect my credit score?

Talking to a credit counsellor does not affect your credit score. If you enrol in a DMP, accounts included in the plan receive a 7 credit rating (e.g. R7) on your credit report.

This stays for two years after you complete the program. Your credit score drops during the DMP but recovers once the notation clears and you rebuild with responsible borrowing.

Will credit counselling affect my ability to get a mortgage?

A DMP puts an R7 rating on your credit report, which mortgage lenders will see. Most people need to wait until the notation clears, two years after completing the program, before qualifying for a mortgage at competitive rates.

What is the difference between a Debt Management Plan and a consumer proposal?

A DMP requires you to repay 100% of the principal owed, with interest reduced or eliminated. It is voluntary for creditors.

A consumer proposal reduces the total amount you owe and is a legal process under the Bankruptcy and Insolvency Act. Once a majority of creditors accept it, the proposal is binding on everyone. Both result in an R7 credit notation.

Can credit counselling stop collection calls in Ontario?

A credit counsellor can ask your creditors to stop collection calls, but they have no legal authority to force it. Creditors can still use collection agencies during a DMP.

If you need legal protection from creditor actions, a consumer proposal or bankruptcy through a Licensed Insolvency Trustee provides a stay of proceedings that stops all collection activity.

How long does a Debt Management Plan last?

A DMP lasts up to 60 months (five years). Most plans are completed in three to five years, depending on how much you owe and what you can pay each month. There is no penalty for paying it off early.

Does the Ontario government offer credit counselling?

The Ontario government does not directly provide credit counselling services. Resources are available through 211 Ontario, the Steps to Justice website, and the FCAC provides federal guidance on finding a reputable credit counsellor.

For direct credit counselling, contact a non-profit agency accredited by Credit Counselling Canada or CAFE.

Can credit counselling help with CRA tax debt?

A DMP through credit counselling does not typically cover tax debts owed to the Canada Revenue Agency. CRA is not obligated to participate in a voluntary DMP and generally does not reduce the amount owed through that process.

If tax debt makes up most of what you owe, a consumer proposal through a Licensed Insolvency Trustee can include CRA debt and reduce the total amount you repay.

How do I know if a credit counselling agency in Ontario is legitimate?

Check whether the agency is accredited by Credit Counselling Canada or the Canadian Association for Financial Empowerment (CAFE). Confirm it is a registered non-profit and verify its standing with the Better Business Bureau.

Ask whether counsellors hold the AFCC or CFC designation, and confirm that no counsellor is paid on commission. If an agency charges upfront fees, guarantees specific outcomes, or pressures you to sign immediately, find another one.

Talk to a certified credit counsellor

If your debts are getting harder to manage, a free consultation with a certified credit counsellor is a sensible first step.

You can also book a free, confidential appointment with a Licensed Insolvency Trustee to find out whether credit counselling, a Debt Management Plan, a consumer proposal, or another option is the right fit for your situation.