Easing Financial Burdens: Consolidated Credit Review
By Maude Gauthier | Published on 07 Mar 2024
It isn’t exactly news, but Canadians are struggling financially. For instance, covering a $500 unexpected expense is not an option for a quarter of us. In 2022, over 103,586 insolvencies were filed with the Office of the Superintendent of Bankruptcy (OSB), reflecting a steep increase from the previous year. Before anyone ends up filing for insolvency, they should be aware of one solution: Consolidated Credit in Canada.
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At a glance
Consolidated Credit helps Canadians by offering plans to manage their debt. They can help you save on the cost of interest. There is no guarantee, however, that you will get out of debt, as you still have the responsibility to make payments, and they are not fully transparent about their fees.
A Company with Great Reviews
Founded in 2005, Consolidated Credit’s mission is to assist Canadians in debt management problems through education and professional counselling. Anyone with unsecured debts can ask Consolidated Credit for help, including credit cards, personal loans, lines of credit, utility bills, debt collection accounts.
The first striking feature of Consolidated Credit is the degree of approval across reviewers. On Trustpilot, 6,615 people gave it an average score of 4.9/5. The Better Business Bureau (BBB) also gives a 3.97/5 score based on 30 reviews. It seems like Consolidated Credit employees are knowledgeable and understanding of clients.
However, a few customers said they felt pressure to make a decision. Some people also noted running into some problems when asking to change payment amounts or dates, such as not getting any answer and having to complain. Some people also mention still receiving calls from previous creditors a bit after the consolidation and a drop in credit score.
Getting a Quote
Asking for a quote, I was surprised to see they only needed my name, postal code and contact information. They immediately said that I could “eliminate my $1,000 debt with a monthly payment of $21.00”.
Ten minutes later, I received an automated call requesting that I call back at 1-800-656-4120. I called and talked to Michelle on March 7 at 2:15 PM. She told me I had to have at least $2,000 in debt for them to be able to help me. She also categorically refused to give me an estimate of the fees, even when I asked if it would be closer to $10 or $100 per month. That was disappointing!
Credit Counselling
When you ask for help, Consolidated Credit Canada offers a phone call to help you understand your options. Then, you can opt for their Debt Management Plan (or not). You do not have to pay for the call.
Debt Consolidation on Your Own
Debt consolidation is a popular option that allows you to combine all your debt into one loan. You can roll multiple bills into a single monthly payment, making debts easier to manage. The goal is also to reduce the interest charges applied to your debt.
To start consolidating your debts, you can contact your bank to get a consolidation loan, a line of credit or a credit card especially made for balance transfers (with a low rate). However, you will need a good credit score and an average or low debt-to-income ratio to get approved. If you don’t meet the requirements – for instance, if your credit score is lower than 660 -, turning to a debt management plan such as the one offered by Consolidated Credit might be a good idea. Get your credit score for free to see where you stand.
Debt Consolidation with Consolidated Credit Canada
Consolidated Credit’s Debt Management Plan (DMP) allows you to repay your total debt at a lower interest rate. Their credit counselling team works with your creditors on your behalf to set up an affordable repayment plan. No matter what the amount of your debt, you make one payment each month for a period of 36-60 months, and Consolidated Credit distributes the funds to your creditors on your behalf.
There is also a monthly administrative fee, plus a one-time set-up fee. The amounts vary based on the total debt you owe, your budget and your financial situation. They roll into the monthly payment you make each month to eliminate your debts.
A DMP is not to be confused with debt settlement, consumer proposal or bankruptcy, as shown in the table below.
| Pay debt in full? | Impact on credit score | |
| DMP | Yes | Lower |
| Debt settlement | No | Higher |
| Consumer proposal | No | Higher |
| Bankruptcy | No | Higher |
With a DMP you still have to pay your whole debt. You should also be aware that having a debt management plan will close your credit cards, and it will be noted on your credit report for two years from the date you complete the program. This means it will negatively impact your score (and ability to obtain further credit) for quite some time. I suggest you discuss this matter with your counsellor before subscribing to any plan. All things considered, the impact will probably be worse if you choose a consumer proposal or bankruptcy, for instance.
Here’s an example of the help Consolidated Credit offered to someone with over $20,000 in credit card debt and $800 monthly payments. They were able to negotiate a reduction of monthly payments to $394.
| Before | After | |
| Credit Cards Total Balance | $21,326 | $21,326 |
| Interest Rate | 19% | 0-5% |
| Total Estimated Interest | Over $12,000 | $630 |
Canadians may experience changes in their income, employment, and other circumstances in life that impact their overall ability to pay bills. Consolidated Credit Canada is here to help them with budget assistance, counselling sessions and a solid debt management plan.
