Debt consolidation is a popular debt relief strategy in Canada. Offered on its own or through a credit counselling agency as part of a comprehensive debt repayment plan, debt consolidation is popular because it is easy to understand and offers real savings.


If you can currently make your minimum monthly payments, then you may not need a more drastic debt relief strategy. Consolidating your debts means you’ll typically end up with a lower interest rate, which means a lower monthly payment. This helps with cash-flow and even gives you the opportunity to put that extra money towards your principal debt, paying it off faster.


Having to manage several payments on different debts each month is an unnecessary hassle. It’s easy to get overwhelmed when you are trying to manage multiple payments, making it easy for one of them to fall through the cracks. This can lead to late fees, additional interest rates, and a snowball effect whereby your debt gets so far out of control that you are forced into personal bankruptcy. Debt consolidation leaves you with one payment, which is far easier to manage than several payments no matter how organized you happen to be.

Credit Score

Not all debt relief programs are created alike. Some, like the consumer proposal, which was developed to help consumers avoid the loss of assets with bankruptcy, leaves a significant negative mark on your credit report for several years. Debt consolidation, on the other hand, does not hurt your credit that way. With debt consolidation, you might experience a slight and brief decline in your credit score when you first take out your loan. That would be because of points against you for having incurred another loan and points against you because your lender looked into your qualifications for the loan. Your score may be back to normal almost immediately, however, as you make payments on your new consolidated loan, and in some cases your score will actually improve as banks see you making regular on-time payments.

Avoid Bankruptcy

Bankruptcy should always be viewed as your last resort. It ruins your credit for seven years, forces you to surrender most of your possessions (minus certain bankruptcy exemptions), and causes other problems. Debt consolidation can help you avoid bankruptcy by making your debt more affordable. Consolidating your debt early will help you keep up with it later.

Is Debt Consolidation your best option?

Fill out the debt relief application to learn more about debt relief options and find out what’s best for you.