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Credit counselling: what it means, and what it can do for you.
Credit counselling is a required part of every consumer proposal and bankruptcy in Canada. It is also a practical tool for anyone who wants to strengthen their financial skills and prevent future debt problems. Here is what to expect.
- Required by federal lawTwo credit counselling sessions are mandatory during every consumer proposal and bankruptcy under the BIA.
- Practical, not punitiveSessions are about budgeting, credit rebuilding, and long-term financial skills. Not a lecture.
- Included in your proposal or bankruptcyThere is no separate fee. Counselling is part of the service your trustee provides.
- Helps you rebuild, not just recoverThe goal is long-term financial health, not just getting through the process.
Day Group Inc. provides all required counselling sessions as part of every consumer proposal and bankruptcy we administer.
What is credit counselling?
In the context of insolvency, credit counselling refers to the two mandatory financial education sessions that every person completing a consumer proposal or bankruptcy must complete under the Bankruptcy and Insolvency Act. These sessions are provided by your Licensed Insolvency Trustee and are part of the regulated process.
The sessions are practical. They cover budgeting, money management, and the steps you can take to build a stronger financial foundation going forward. They are not a condition attached to blame. They are a tool designed to support your long-term success after the process is complete.
You cannot receive your Certificate of Full Performance (for a consumer proposal) or your absolute discharge (for a bankruptcy) until both counselling sessions are completed. Scheduling them promptly after filing keeps your process on track.
Credit counselling agencies
Separate from the insolvency context, non-profit credit counselling agencies offer debt management plans and financial education services. These organisations work with people whose debt is manageable through a structured repayment plan. They are legitimate and useful for the right situation, but they cannot file consumer proposals or bankruptcies, and creditors are not legally required to participate in their programs.
What credit counselling is not
Some for-profit companies use the term “credit counselling” to describe debt settlement services. These are not the same thing. Licensed Insolvency Trustees are required by law to refer to the mandatory sessions by their correct name, and Day Group will always be clear with you about exactly what each step in your process involves.
Two sessions, every time.
Federal law requires exactly two counselling sessions as part of every consumer proposal and bankruptcy. The first session typically occurs within the first few months of filing. The second occurs later in the process, before discharge or completion.
No separate charge.
The two mandatory counselling sessions are included in the administration of your consumer proposal or bankruptcy. There is no additional fee for completing them. Your trustee provides these sessions as part of the regulated service.
“The counselling sessions were the part I expected to dread. They were actually the most useful part of the whole process.”
The two mandatory counselling sessions.
Each session is approximately one hour and can be completed in person, by phone, or virtually. Here is what each session covers and when it typically takes place.
Understanding your finances and your situation.
The first session focuses on understanding how you got into financial difficulty and building the practical skills to manage money more effectively going forward. This is a supportive conversation, not an examination.
- Reviewing your income, expenses, and spending patterns
- Building a realistic monthly budget
- Understanding the causes and warning signs of financial difficulty
- Setting financial goals for during and after the process
- Introduction to how credit works and what affects your credit score
Building your financial foundation for what comes next.
The second session shifts focus toward the future. With your proposal or bankruptcy nearing completion, this session is about the practical steps you can take to rebuild your credit and maintain financial stability long term.
- Understanding your credit report and what the proposal or bankruptcy will show
- Practical steps for rebuilding credit after completion
- Managing credit cards and loans responsibly going forward
- Savings strategies and emergency fund basics
- Avoiding the patterns that led to financial difficulty
Both sessions must be completed before you can receive your Certificate of Full Performance (consumer proposal) or your absolute discharge (bankruptcy). If you are having difficulty scheduling a session, contact your trustee promptly. Sessions can be completed by phone or video, which makes scheduling more flexible for people across Alberta, Saskatchewan, and Manitoba.
When financial guidance can help, even without a formal process.
Not everyone who needs financial guidance needs a consumer proposal or bankruptcy. For some people, the right support is practical budgeting advice, a clearer understanding of their credit, and a plan for managing debt before it becomes unmanageable.
Your debt is manageable but growing
You are keeping up with payments but credit card balances are slowly creeping up and you are not sure how to get ahead of them.
You want to understand your credit report
You are not sure what is on your credit report, what it means for your financial options, or how to improve your score.
You have recently completed a proposal or bankruptcy
You want additional support with credit rebuilding and establishing better financial habits after completing a formal process.
You want to build a better budget
You have a stable income but are not sure where the money goes, or you want a structured plan for saving while managing existing debt.
- Your total debt is high relative to your income and growing despite your efforts
- You are receiving collection calls or legal threats from creditors
- Your wages are being garnished or are at risk of garnishment
- You owe the CRA and collection action has started
- You have already tried budgeting or a debt management plan and it has not been enough
- You cannot make minimum payments on one or more accounts
If any of these apply to your situation, a consumer proposal or bankruptcy may offer more effective relief. A free consultation with a Program Manager will confirm which path makes the most sense.
Rebuilding your credit: what it actually looks like.
Credit rebuilding is one of the most common topics in the second counselling session, and one of the most misunderstood aspects of life after insolvency. Here is a realistic, step-by-step picture.
Filing date
Your credit report is updated to reflect the proposal or bankruptcy. Interest stops. Collection activity stops. For many people, this is the first step toward rebuilding, even if it does not feel that way yet.
Early rebuilding phase
Many people are eligible to apply for a secured credit card within weeks of filing. A secured card requires a deposit as collateral, so there is no credit check. Using it regularly and paying the balance in full each month begins building a positive credit history immediately.
Positive history accumulates
With consistent on-time payments and responsible credit use, your score typically begins improving. Some people qualify for a small unsecured credit product within the first year or two, depending on their overall profile.
Meaningful improvement
By this point, many people qualify for car financing, unsecured credit cards, and in some cases mortgage pre-approvals, even while the proposal or bankruptcy still appears on their report. Your recent credit behaviour matters more to many lenders than your credit history from years ago.
Report cleared
The proposal or bankruptcy record is removed from your credit report according to the applicable timeline (3 years after completing a proposal, 6 years after discharge for a first bankruptcy). Your positive history from the rebuilding period remains and forms the basis of your credit going forward.
Individual timelines vary. This is a general illustration, not a guarantee of specific outcomes.
Start with a secured credit card
A secured card is the most accessible credit product after insolvency. Use it for small, regular purchases, and pay the full balance every month. This demonstrates responsible credit use without risk.
Pay every bill on time, every time
Payment history is the single most important factor in your credit score. Consistent on-time payments, even on a secured card or a utility account, accumulate into a positive track record.
Keep your credit utilisation low
Using less than 30 per cent of your available credit at any time is generally recommended. High utilisation signals financial stress to lenders, even if you pay your balance in full each month.
Monitor your credit report
In Canada, you can check your credit report for free through Equifax and TransUnion. Review it regularly to confirm that the proposal or bankruptcy is recorded correctly and that positive accounts are being reported accurately.
Be patient with mortgage applications
Most lenders require at least two years of established credit history after a consumer proposal or bankruptcy before approving a mortgage. Government-backed options through CMHC may be available sooner in some circumstances. Your trustee can discuss what to expect based on your situation.
Three very different types of help.
The terms “credit counsellor,” “debt consultant,” and “Licensed Insolvency Trustee” are used interchangeably in some advertising. They represent very different qualifications and very different legal authority.
Federally licensed. Legally authorised.
Only LITs can file consumer proposals and bankruptcies in Canada. They are regulated by the Office of the Superintendent of Bankruptcy, hold a federal licence, and are legally obligated to act in your interest. Their fees are regulated by law. Day Group Inc. is a Licensed Insolvency Trustee.
Legitimate. Limited in scope.
Non-profit credit counselling agencies offer debt management plans and financial education. They are legitimate and useful for manageable debt levels. They cannot file consumer proposals or bankruptcies, and creditors are not legally required to participate in their programs.
No legal authority. Buyer beware.
For-profit debt consultants and “debt settlement” companies have no legal authority to compel creditors or provide formal debt relief. They charge fees with no guarantee of outcome. The OSB and consumer protection agencies across Canada have issued significant warnings about this category.
Guidance from a federally regulated professional.
Day Group Inc. provides credit counselling as part of a fully regulated insolvency process, with no additional fees and no commercial interest in the advice we give.
Included in every proposal and bankruptcy
The two mandatory counselling sessions are administered by Day Group as part of every consumer proposal and bankruptcy we handle. There is no separate fee and no referral to a third party.
Practical and forward-looking
Our sessions focus on your financial life after the process is complete, not on reviewing past mistakes. The goal is to give you the tools and knowledge to maintain financial stability long term.
Prairie clients, prairie context
We understand the financial realities of Alberta, Saskatchewan, and Manitoba, including regional industries, income patterns, and the provincial rules that affect your situation. Our guidance is relevant to where you live.
Day Group Inc. is a Licensed Insolvency Trustee regulated by the Office of the Superintendent of Bankruptcy Canada, serving Alberta, Saskatchewan, and Manitoba. LIT licence number: 4172. The information on this page is for general informational purposes only and does not constitute legal or financial advice.
Frequently asked questions about credit counselling.
Plain answers to the questions we hear most often about credit counselling and credit rebuilding.
Are the two credit counselling sessions mandatory?
Yes. The Bankruptcy and Insolvency Act requires two credit counselling sessions for every person completing a consumer proposal or personal bankruptcy in Canada. You cannot receive your Certificate of Full Performance or your absolute discharge until both sessions are completed.
Your trustee will explain when the sessions are scheduled and how to complete them. They can be done in person, by phone, or virtually.
How long does each counselling session take?
Each session is approximately one hour. They are structured conversations, not formal examinations. You will be asked about your financial situation, your goals, and the topics relevant to your stage in the process.
Is there an extra fee for the counselling sessions?
No. The two mandatory credit counselling sessions are included in the administration of your consumer proposal or bankruptcy. There is no additional fee. Day Group provides these sessions as part of the service we are required by law to deliver.
How soon can I start rebuilding my credit after a consumer proposal?
You can begin working on your credit during your consumer proposal. Many people apply for a secured credit card within the first few months of filing. A secured card requires a deposit as collateral and does not require a credit check, making it accessible even during the proposal period.
Using it responsibly by making small purchases and paying the balance in full each month begins building a positive credit history that will support your score after the proposal is completed.
What is the difference between a Licensed Insolvency Trustee and a credit counsellor?
A Licensed Insolvency Trustee is a federally licensed professional under the Bankruptcy and Insolvency Act, with the legal authority to file consumer proposals and bankruptcies, administer insolvency estates, and provide the mandatory credit counselling sessions required by law.
A credit counsellor from a non-profit agency can offer debt management plans and financial education, but cannot file consumer proposals or bankruptcies, and cannot provide legally binding protection from creditors. Both can be useful, depending on your situation. A free consultation with a Program Manager will clarify which is appropriate for you.
Can I get a mortgage after a consumer proposal or bankruptcy?
Yes. Many people qualify for a mortgage after a consumer proposal or bankruptcy, though the timeline and requirements depend on the type of insolvency and the lender.
Generally, most conventional lenders require at least two years of established credit history after completing a consumer proposal or receiving a bankruptcy discharge. Some alternative lenders and government-backed programs through CMHC may have different requirements. Demonstrating a consistent pattern of responsible credit use during the rebuilding period is the most important factor. Your trustee can discuss realistic timelines based on your situation.
Today is the day.
The first conversation costs nothing. A Licensed Insolvency Trustee will review your situation, explain your options, and answer any questions you have about debt relief and credit rebuilding in plain language.