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Credit Counselling Unmasked | GEM Debt Law

We are going to reveal the whole process and share misunderstood details about Credit Counselling, how it affects you, and whether it’s the right choice for you.
Quick summary: Credit Counselling requires fully paying the current balances of your unsecured debts – every penny must be paid. This is done through a debt repayment plan.
An advantage: a counselor creates the repayment plan. Drawback: full debt balances absolutely must be repaid – no exceptions.

How it affects you

  • Negatively impacts your credit score:

Signing up for a debt management plan with a Credit Counsellor ultimately affects your credit. When you enroll in Credit Counselling, it’s denoted on your credit report. Having this on your credit report makes it harder to qualify for credit or loans. Why? Because it’s clear you are still repaying unmanageable debts.

When your debt is finally repaid, the note mentioned above doesn’t immediately come off your credit report. Instead, the note remains on your credit report for 3 years. This continues to notify lenders that you had difficulty managing debt. Bankruptcy and Consumer Proposal have the same procedure after the debt is repaid.

  • Takes longer to pay and higher payments:

A Credit Counsellor will provide a payment plan over a set period of time, on average 3 – 5 years. This can take longer to satisfy than other debt-relief options (i.e. Debt Settlement, which can take as little as 2 weeks to 6 months depending).

  • Forced to freeze/close your credit cards:

When enrolling in Credit Counselling, you are forced to freeze credit card usage while paying off debt under the Credit Counselling Debt Management Plan. This can also affect you negatively in the future. If your credit card provider sees that you’re enrolled into a debt management plan, they can choose not to extend your credit or offer deals in the future, as you don’t ensure their trust.

Credit cards are a source of building credit, and closing them will cause a drop in your credit score. Keep the credit cards and choose Debt Settlement.

While Credit Counselling is a debt relief option, be careful before jumping to the conclusion that it’s the only option. There are other alternative solutions (such as Debt Settlement) that come with other advantages (i.e. Debt Settlement lets you keep credit cards).


Debt itself is stressful and speaking with a professional for free is your best starting point. While Credit Counselling is an option, it’s not for everyone. If you require help with your debt, it’s important that you don’t make the wrong choices. Fill out our contact form and one of our legal professionals will reach out and provide free advice on how to move forward. 

GEM Debt Law


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