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6 ways to consolidate debt in Toronto

Read our guide to debt consolidation options in Toronto, how to choose the right strategy and where to apply.

If you’re paying off multiple debts, debt consolidation allows you to combine them all into one monthly payment. This makes it easier to manage debt repayments and reduces the amount of interest you pay.

From debt consolidation loans to balance transfer credit cards, there are several ways to consolidate debt. Keep reading for your guide to debt consolidation in Toronto and how to choose the right debt consolidation method for your needs.

6 types of debt consolidation in Toronto

Type of debt consolidationWhere to get itWho it’s suited for
Debt consolidation loanBanks, credit unions and online lendersPeople with fair to excellent creditCompare lenders
Learn more
Balance transfer credit cardBanks, credit unions and credit card companiesPeople with good to excellent creditLearn more
Line of creditBanks, credit unions and online lendersPeople with good to excellent creditLearn more
Debt management programNon-profits and debt relief companiesPeople whose debts qualify for the program – you’ll need to meet with a credit counsellor to determine eligibilityLearn more
Debt settlementNon-profits and debt relief companiesPeople with at least $10,000 in unsecured debtLearn more
Consumer proposalLicensed insolvency trusteesPeople who aren’t eligible for other debt consolidation optionsLearn more

What is debt consolidation?

Debt consolidation is when you combine multiple debts into one. The aim of doing this is to reduce the amount of interest you pay, helping you get out of debt sooner. It also simplifies your debt payments – instead of managing several debt payments each month, you only have one payment to worry about.

The most common method of debt consolidation in Toronto is a debt consolidation loan, while other ways to access the financing you need include a balance transfer credit card or a line of credit.

But you don’t necessarily need to access new credit to consolidate your debt. Debt management programs, debt settlement and consumer proposals are negotiation processes to consolidate your debt and help you get your finances back on track.

Compare debt consolidation loans in Toronto

1 - 5 of 5
Name Product Ratings Interest Rate Loan Amount Loan Term Requirements
LoanConnect Debt Consolidation Loan
Customer Survey:
8.00% - 46.96%
$500 - $35,000
12 - 60 months
Requirements: min. credit score 300
goPeer Personal Loan
Not yet rated
8.99% - 34.99%
$1,000 - $35,000
36 - 60 months
Requirements: recommended income $40,000/year, no payday loan debt, min. credit score 650, min. 5-year credit history. (Avg. approved rate of 15.80%)
SkyCap Financial Personal Loan
Customer Survey:
19.99% - 39.99%
$500 - $10,000
9 - 60 months
Requirements: min. income $1,666.67/month, full time employment/pension, min. credit score 575, no bankruptcy
Mogo Personal Loan
Customer Survey:
9.90% - 46.96%
$200 - $35,000
6 - 60 months
Requirements: min. income $13,000/year, min. credit score 500
Loans Canada Debt Consolidation Loan
Customer Survey:
6.99% - 46.96%
$300 - $50,000
4 - 60 months
Requirements: min. credit score 300

How debt consolidation loans work in Toronto

The first option most people think of to help get their debt under control is a debt consolidation loan. This loan gives you the money you need to pay off all your outstanding debts, and you then have only one monthly loan payment to manage as well as a lower interest rate. There are secured loans available – for example, you could take out a home equity loan to access a lower rate – but unsecured debt consolidation loans are also offered.

How much they cost

There are several factors that affect the cost of a debt consolidation loan, including the following:

  • Any early repayment penalties on your existing debts
  • Your credit score
  • Your income
  • The amount you borrow
  • The loan term
  • Any fees that apply (such as origination, NSF, late payment and prepayment fees)

How to qualify for a debt consolidation loan

Debt consolidation loans in Toronto are offered by traditional lenders like banks and credit unions but are also available from alternative lenders. Eligibility requirements vary between lenders but you will typically need to meet the following criteria:

  • Be at least 18 years of age
  • Be a Canadian citizen or permanent resident
  • Satisfy credit score requirements
  • Have a steady source of income


A debt consolidation loan can help you do the following:

  • Save money. If you can access a loan with a lower interest rate than your existing debts, you’ll pay less interest in the long run.
  • Manage your debt payments. Rather than paying off the principal and interest on multiple debts at once, you only have to make one monthly payment.
  • Get your finances back on track. With a debt consolidation loan that suits your financial situation, you can pay your debt off sooner.

Watch out for

The drawbacks and risks of debt consolidation loans include the following:

  • Fees. Check the fine print so you know about all the extra charges that apply to your loan.
  • Higher rates. A loan with a higher interest rate than what you’re currently paying could end up costing you more in the long run.
  • Sketchy lenders. Make sure you’re dealing with a reputable lender before taking out a loan.

    Compare Toronto debt consolidation loans

    Balance transfer credit card


    With a balance transfer credit card, you can transfer your outstanding balances from other credit cards over to a new card with a lower interest rate. This lower rate typically lasts for an introductory period of between 6 and 10 months, after which the card reverts to a higher rate.

    How much it costs

    You’ll need to consider the following costs before applying for a balance transfer credit card in Toronto:

    • Balance transfer fee. You’ll have to pay 1-3% of the balance you’re transferring.
    • Promotional interest rate on transferred balance. Your interest rate will be 0-3.5% for up to 10 months (please note that a higher rate will apply to new purchases).
    • Normal interest rate. The card will revert to a rate anywhere between 8.99% and 19.99% on your total balance once the intro period ends.

    How to qualify

    Eligibility requirements vary from one financial institution to another. As a general guide, you may need to meet the following criteria:

    • Have a credit score of 650 or higher
    • Transfer an amount larger than the provider’s minimum balance transfer requirement (could be anywhere from $100 to $10,000)
    • Transfer an amount that is less than the provider’s maximum balance transfer limit (usually 70-100% of your approved credit limit)


    A balance transfer credit card comes with the following benefits:

    • Lower interest. The low interest rate during the introductory period can help you pay down your debt much faster.
    • Consolidate multiple balances. You can transfer balances from multiple cards onto one card, simplifying your monthly payments into one.
    • No annual fee. Many balance transfer credit cards don’t charge an annual fee.

    Watch out for

    The drawbacks and risks of balance transfer credit cards include the following:

    • Balance transfer fee. Make sure you check out the size of the balance transfer fee that applies (it could be as much as 3%) before applying for a card.
    • High interest rate on purchases. Please note that the low rate only applies to your transferred balance. New purchases attract a separate, higher interest rate.
    • Low rate is only temporary. Once the introductory period ends, a much higher interest rate applies.

    Line of credit


    A line of credit is a loan with a pre-determined limit. You can withdraw funds up to that limit whenever you need them, and pay back the money you borrow (plus interest). There are secured and unsecured options available, and you’ll typically access lower interest rates with a secured line of credit.

    How much it costs

    The cost of a line of credit varies depending on factors such as the following:

    • Your credit score
    • Your income
    • Whether you take out a secured or unsecured loan
    • Any establishment, monthly or annual fees that apply

    How to qualify

    Eligibility requirements vary depending on which bank, credit union or online lender you choose. However, as a general guide, you will need to meet the following criteria:

    • Be at least 18 years old
    • Be a Canadian citizen or permanent resident
    • Have a good credit score
    • Have a steady source of income


    A line of credit comes with the following benefits:

    • Lower rates. Lines of credit tend to have lower interest rates than credit cards, plus they also let you access a larger amount.
    • Fixed or ongoing. While some lines of credit have a fixed repayment term, others are ongoing and allow you to continue accessing funds as long as you stay up to date with your payments.
    • Interest only applies to the money you borrow. In most cases, you only pay interest on the funds you borrow, not on the total amount available.

    Watch out for

    The drawbacks and risks of a line of credit include the following:

    • Fees. Check the fine print to find out if any establishment, monthly or annual fees apply.
    • Unnecessary spending. You’ll have to control your spending to ensure that you don’t end up even deeper in debt.
    • Rate rises. Line of credit interest rates are usually variable, so rising rates can make it harder to pay back the funds you borrow.

      Debt management program


      Also known as debt management plans, debt management programs can be accessed through credit counselling agencies. If you sign up for a plan, the agency negotiates with your creditors to get them to combine your debts into one monthly payment at a lower interest rate. You then have up to five years to pay back what you owe.

      How much it costs

      The interest rate depends on what the credit counselling agency arranges with your creditors. It’s worth noting that the agency may also charge establishment and monthly administration fees.

      How to qualify

      The credit counselling agency will work with you to determine whether a debt management plan is right for you. You’ll typically need a reliable source of income to be eligible to sign up to a plan.


      A debt management program comes with the following benefits:

      • Save money. A debt management plan allows you to pay less interest on your debt, and interest may even be eliminated altogether.
      • One monthly payment. Rather than paying off multiple debts at once, all your debts are consolidated into a single monthly payment.
      • No more being hassled by creditors. The credit counselling agency negotiates with creditors for you. Having them agree to a debt management plan will put a stop to creditors harassing you for money.

      Watch out for

      The drawbacks and risks of a debt management program include the following:

      • Fees. Find out what set-up and monthly fees apply before agreeing to a plan.
      • No secured debts. Debt management programs are typically only for unsecured debts.
      • Creditors may say no. Debt management plans are voluntary, so your creditors may not agree to consolidate your debts into one lower-interest payment.

        The table below shows a sample of organizations that help with debt management programs in Toronto.

        NameHow it worksLocation in Toronto
        Debt.caA credit counsellor will assess your financial situation and help you decide whether a debt management plan is the best solution. Once you provide the details of your debts and creditors, the counsellor can contact those creditors to negotiate a low-interest payment plan. A set-up fee and monthly fees apply.Apply online
        Credit Counselling SocietyThis non-profit consumer credit and debt counselling service can help you consolidate multiple unsecured debts into a debt management program. A credit counsellor will negotiate with creditors on your behalf to reduce or eliminate interest on your debts. Financial counselling is also available while you pay off the plan.Online appointments only
        Consolidated Credit CanadaA credit counsellor provides a free evaluation of your debt and financial situation. If a debt management plan suits your needs, the counsellor can contact your creditors to negotiate a single monthly payment and lower interest rates. You make a monthly payment that Consolidated Credit Canada distributes to your creditors. A set-up fee and monthly fees apply.Online appointment or in-person at 151 Yonge St., 11th Floor

        Debt settlement


        Available from debt relief companies and some credit counselling agencies, debt settlement is a more serious solution than any of the others mentioned above. This approach sees the debt relief company or credit counsellor negotiate a one-off lump sum with creditors that you can pay to eliminate your debt. The amount negotiated is lower than the total amount you owe, and you typically pay it off in monthly installments.

        How much it costs

        The amount you end up paying will depend on how much debt you have and what is negotiated on your behalf. The debt settlement company will also charge a fee of around 20%.

        How to qualify

        Typically limited to unsecured debts.


        Debt settlement comes with the following benefits:

        • Pay back less than you owe. The amount you pay to settle your debts may be less than the total amount you owe.
        • Save on future interest charges. Settling your debts means you won’t continue accruing interest on the money you owe.
        • No more dealing with creditors. The debt settlement company negotiates with creditors on your behalf.

        Watch out for

        The drawbacks and risks of a debt settlement include the following:

        • You need to be able to afford the lump sum. If you can’t provide the funds needed to negotiate a settlement, this option won’t work.
        • Fees apply. Make sure you’re aware of all fees charged by the debt settlement company.
        • Your credit score will suffer. Settling your debts will have a negative impact on your credit score
        • Creditors can refuse your offer. One or more of your creditors may refuse to accept any settlement offers made on your behalf.

          Take a look at the table below for a sample of organizations that help with debt settlement in Toronto.

          NameOverviewLocation in Toronto
          Debt.caIf a debt settlement program is the best choice for your financial situation, can negotiate with creditors on your behalf to secure a reduced principal and lower interest rates. The aim is to help you get out of debt over a period of one to three years.Apply online
          Credit Counselling SocietyCredit Counselling Society negotiates a lump sum with creditors that you can pay to settle your debt. You’ll need to have sufficient funds available to pay this lump sum, and fees only apply once creditors have accepted your debt settlement offer.Online appointments only

          Consumer proposal


          A consumer proposal is a legal agreement administered by a licensed insolvency trustee. The trustee helps you compile a proposal to submit to your creditors to help you get out of debt. The proposal will offer to pay off a percentage of the funds you owe, give you longer to pay back what you owe or both. The maximum term of an agreement is five years.

          How much it costs

          The amount you pay will depend on the size of your debt and what you negotiate with your creditors. You can also expect to pay approximately $1,500 in fees.

          How to qualify

          Consumer proposals are suitable for unsecured debts of less than $250,000. Creditors also have the right to reject your proposal, for example, because you’re not offering enough money or the repayment term is not to their liking.


          A consumer proposal comes with the following benefits:

          • Pay less than what you owe. If your proposal is accepted, you’ll be able to pay back less than the total amount you owe or negotiate a longer payment term.
          • One monthly payment. You can consolidate all your debts into a single payment.
          • Less damage to your credit. A consumer proposal is less damaging to your credit score than declaring bankruptcy. It also allows you to keep your assets.

          Watch out for

          The drawbacks and risks of a consumer proposal include the following:

          • Negative impact on credit score. Your credit score will take a hit if you file a consumer proposal.
          • Stays on your credit report. The consumer proposal is listed on your credit report for three years after you finish paying it off.
          • No secured debts. You can’t negotiate a consumer proposal for any secured debts you have.

            Check out the table below for a sample of companies that can help with consumer proposals.

            CompanyOverviewLocation in Toronto
            Hoyes, Michalos & AssociatesHoyes, Michalos & Associates is a firm that offers licensed insolvency trustees and credit counselling in downtown Toronto. It can assess your financial situation and then help you decide on the best debt relief solution, including working with you to put together a consumer proposal to your creditors.8 King Street E, Suite 800 Toronto, ON
            David Sklar & Associates IncDavid Sklar & Associates Inc offers a team of licensed insolvency trustees in the heart of Toronto. These trustees can help guide you through the consumer proposal process and negotiate a debt reduction of up to 80%.550 St. Clair Avenue West, Unit 2 Toronto, ON

            How to choose the best debt consolidation service in Toronto

            Searching for a debt consolidation service in Toronto? These tips will help you find the right service for your needs.

            • Free or paid. Debt relief services can be not-for-profit or run to make a profit. You can generally find lower fees at not-for-profit services.
            • Products and services offered. Check out what sort of debt relief products are available and whether they match your needs. For example, does the company offer credit counselling to help you manage your debt? Does it provide licensed insolvency trustees to help you submit a consumer proposal? Does it offer loan amounts and interest rates that suit your financial situation?
            • Company history. Read up on the company’s history and bona fides. Check out how long it has been in business and whether it specialises in debt relief only or also offers other financial services.
            • Educational resources. Check whether the debt consolidation service offers any additional resources to help you manage your money and get out of debt. For example, some providers offer free credit counselling and webinars to help educate their customers.
            • Customer reviews. Look at real customer reviews on independent review websites to find out what previous customers have to say about a service. Did it help them get their finances back on track?
            • Watch out for scams. Finally, be sure to watch out for any warning signs that could indicate a disreputable provider. For example, if a debt consolidation service doesn’t have a head office, if it offers guaranteed loan approval or if it uses forceful sales tactics, consider other options.

            Make sure you compare a range of options before deciding on the best debt consolidation service in Toronto for you.

            How debt consolidation can affect your credit score

            The impact of debt consolidation on your credit score will vary greatly depending on your financial situation and the consolidation option you choose.

            Applying for a debt consolidation loan or a line of credit, for example, may cause a drop in your credit score in the short term. But if you make regular on-time payments and pay down your debt, this will help improve your credit score.

            It’s a similar story for balance transfer credit cards. Applying for new credit will lead to a dip in your credit score, while maxing out your credit can also have a negative impact. But if you pay off your balance transfer in the introductory period, this will give your credit score a boost.

            Entering into a debt management plan can also lower your credit score, and it’ll stay on your credit report for two years after you’ve finished the plan. However, successfully completing the plan and showing that you can budget and manage your payments will lead to an increase in your credit score.

            Finally, debt settlement and consumer proposals can have a serious impact on your credit score. As you’ll end up paying back less than the amount you owe under these methods, your credit score can take a significant hit. However, chances are that a settlement or a consumer proposal will be better for your credit score than the alternative – continuing to miss payments to multiple creditors and falling even deeper into debt.

            Frequently asked questions

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