📅 Last Updated: November 4, 2021
✏️ Written By Kale Havervold
🕵️ Fact-Checked by Caitlin Wood

For many consumers in Quebec, managing their monthly bills consists of paying for utilities, housing (mortgage or rent), insurance, car payment, credit card bill, and then maybe putting a little toward their student loans. They have debt, but it isn’t overly complicated and they are comfortable with it. However, there are others where it’s a whole different story.

Will paying off a credit card bill help increase your credit score? Find out here.

If you have too many bills it’s hard to keep track of them and your monthly income barely covers your debt, it may be time to ask for help. Thankfully, if you are struggling to get control of your debt and are at your wit’s end, you should consider applying for debt consolidation in Quebec.

The Two Types of Debt Consolidation

There are actually two types of debt consolidation in Quebec that people can utilize if they need help managing their debts. When most people think of debt consolidation, they think of a debt consolidation loan. This involves taking out a larger loan and essentially paying off your various other (and smaller) loans. This will make your monthly payment much simpler and consolidation loans can often get you a lower interest rate as well.

Here’s what to do if your debt consolidation loan application gets denied.

However, if you’d rather not take out a whole new loan to cover your current loans, you can opt for a debt consolidation program. This involves meeting with a credit counsellor who will work directly with your lenders to try and reduce interest and create a repayment plan that works for your financial situation. You’ll make monthly payments to your counsellor who will then distribute the money according to the plan all parties agreed to.

Either option is good, but of course, it depends on your unique situation, so be sure to speak with an expert to see which option they recommend for you. Of course, whichever you feel the most comfortable with should be your top choice. While it’s always a good idea to listen to an expert, don’t anyone talk you into something you are not completely comfortable with.

Reasons Why People Get into Debt

Unfortunately, there are thousands and thousands of Quebec residents who are currently struggling with debt, for many of these people debt consolidation may be the debt relief they’ve been looking for.

Wondering if the Federal Government provides debt relief? Look here for the answer.

What Are The Main Causes of Debt in Quebec?

While everyone’s financial situation is different and debt can be caused by any number of factors, there are a few common denominators when it comes to the accumulation of debt. Many of the reasons why people get into debt simply revolve around not being financially knowledgeable, having terrible financial habits, or overspending. This could be anything from taking out a loan larger than you need, spending too much on clothing or entertainment or trying to “keep up with the Joneses”. In addition to bad financial habits and overspending, people can get into debt because of:

  • Job loss
  • A sudden and unexpected reduction in income
  • Medical emergencies
  • Financial-related emergencies like car crashes, home repairs, and more.

So as you can see, bad habits are one of the main reasons why consumers accumulate debt, it is not the only reason. Unfortunate life events can also cause a lot of debt, events that are not in your control. This is why it’s so important that we arm ourselves with the knowledge we need to handle debt problems, no matter how they came about.

Read this if you’re in need of a bad credit loan in Quebec.

Alternatives to Debt Consolidation In Quebec

While debt consolidation in Quebec is a great option, it is far from the only option available to you if you are struggling with debt. The other available options include:

Debt Settlement

Debt settlement is when you (or a representative) reach out to your creditors and see if they will agree to settle your debt for less than the actual amount you owe. It can save you some money a lot of money in the long run. Just keep in mind that a creditor isn’t likely to accept unless there is no reasonable way for you to pay off your debt in full.

Credit Counselling

This option is all about financial education and learning the necessary tools to better handle and understand your debt. This is generally accessible to everyone and will involve you meeting with credit counsellors a few times to come up with a good debt management plan to help you pay off your debts as easily and quickly as possible.

To know more about credit counselling in Quebec, read this.

Consumer Proposal

If you have loans that you cannot manage but are not ready to declare bankruptcy yet, it makes sense to go with a consumer proposal. A consumer proposal is a binding agreement that protects you from debt collectors while your license insolvency trustee and creditors arrange a partial repayment of your debt. This option also protects your assets, and the negative effect generally isn’t as great on your credit score and report.


Bankruptcy is one of the most serious alternatives, but definitely can be the right call for some people. Yes, you get out of debt, but you also stand to lose a large portion of your assets to pay off the debt and your credit will take a serious hit for years. Before even considering this option, be sure to consider every other option available.

As for which option you should go with, that will totally depend on your unique needs, wants, and financial situation. If you are struggling with deciding which will be the best for you, seek out the advice of an expert.

Frequently Asked Questions

How does debt consolidation affect my credit score?

Initially, there might be a slight decrease in credit score since a credit check is required. In the long-term, your score will improve. This is especially true for those with low credit scores. According to TransUnion, 84% of subprime borrowers see an improvement of 20+ points after consolidating their debts.

How can I qualify for a debt consolidation loan?

Each lender will have different criteria for their debt consolidation loans. That said, you will not qualify for debt consolidation loans if you are enrolled in credit counseling, a consumer proposal, or bankruptcy. You will also need a steady income with a reasonable debt-to-income ratio. If you are unable to qualify, you should consider consolidation options that do not involve a new loan, such as credit counseling or a consumer proposal.

Which debts can I consolidate?

Certain debts are best suited for consolidation while others are not. It’s best to consolidate any unsecured debts with high interest rates, such as credit cards and personal loans. Student loans or debts owed to a tax agency like the CRA shouldn’t be consolidated. Those should be negotiated separately. Secured loans like car loans, mortgages, and home equity loans shouldn’t be consolidated either. But, they can be rewritten by your lender to consolidate unsecured debts.

The Debt Consolidation Help You Need

Dealing with debt can be stressful, but there are options out there to help you get back on your feet, including debt consolidation. If you’re interested in more information about debt consolidation in Quebec, reach out to Loans Canada today.

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