Contacting Your Creditors

Contacting Your Creditors

By yourself l Through a debt management program

What does this mean?

Making arrangements with your creditors is a way to ease your debt repayments. Draw up a list of your creditors, then contact them with a proposal for either a reduction in your payments, an extended deferral of your debts or a reduced rate of interest (or all three). You can also ask a debt management program advisor to do this on your behalf (refer to the section on debt management programs below).

The budget you have prepared will allow you to clearly show your creditor how much you are actually able to pay until your situation improves. Be realistic — don't make a proposal that you will be unable to implement. Often, creditors will agree to negotiate with you since their ultimate goal is to recover the money you owe them.

Red HandImportant — Remember that your creditors are not legally obliged to make any special arrangements with you, nor are they required to abide by them. Their ongoing cooperation is completely voluntary.

When contacting your creditors, you can try to:

  • Have your payments spread out over a longer period, thereby reducing your minimum monthly payment;
  • Negotiate a reduced rate of interest, which should also reduce the amount you have to pay (some credit card issuers offer cards at a reduced rate of interest — ask about them);
  • Obtain a deferral for some payments;
  • Have your total debt reduced (for example, you owe $5000 but you offer to pay $3000 cash right away using money that you may, for example, have received from an income tax refund). If such a proposal is agreed upon, be sure to obtain a written notification of your agreement that indicates the terms (i.e. that your have no outstanding debt due and that your debt is now cleared with this creditor).

The financial institutions that issued your credit cards may require that you stop using your credit card or may even revoke it. Be flexible and open. You are not in a position to refuse and, in any case, you cannot use your credit card if you have reached your credit limit. By voluntarily suspending the use of your credit cards, you will avoid the temptation to add new debt (on which you may also have to make interest payments). Avoiding the use of a credit card will improve your financial situation and make it easier to stick to your budget.

Eligible Debts

You can try to make new payment arrangements for all types of debts except mortgages, although even these may sometimes be eligible depending on the financial institution and on your financial situation. Under certain circumstances (a job loss, for example), some financial institutions currently offer a mortgage payment relief period of up to six months (deferred payment of principal).

You can exclude certain creditors if you wish — it is up to you. If negotiating with only one creditor provides you with the leeway you need, you don't have to work out an agreement with the others. However, if you are dealing with a debt management program advisor, you should let them know about all of your debts. They will usually check into your situation and find out where you stand. It is best to be completely honest about your financial circumstances.

Who qualifies?

Any consumer who is having difficulty meeting financial obligations may try this option. The key is to take action as soon as possible before the situation gets any worse.

However, this option is most suitable for people who usually make most or all of their required payments, but are temporarily having difficulties with their finances.

Ideally, your total debt load and the number of creditors you owe money to should not be excessive. Otherwise, no creditor will take you seriously.

In what order? Where do you start?

By reviewing your budget, you will be able to see if reducing the monthly payment for a single debt is enough to get your finances in order. If so, it won't be necessary to contact all of your creditors. However, if a payment reduction from just one creditor doesn't quite get your head above water, you could choose to contact all of the creditors to whom you owe the largest amounts of money. This will have a greater impact on your monthly budget.

For greater peace of mind, you could choose the creditors to contact who have already contacted you asking to be paid. For more information on relevant practices in this area, refer to the section on collection agencies.

If your review reveals that you owe money for essential services (telephone, hydro, heat, rent, etc.) you could start by paying off these debts first so that you and your family avoid possible service cuts or loss of your home. If you are faced with excessive debt, the option of making arrangements may not be adequate, especially if some of your creditors are unwilling to enter into an agreement with you (which is within their right). You would then need to try some of the other options.

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A) Contacting your creditors by yourself

Summon your courage and start making your calls. You are undoubtedly the best person to convince your creditors what you are capable of doing. The fact that you have prepared a budget will help you be more persuasive during negotiations with them.

How much does it cost?

It does not cost anything to make arrangements with one or more of your creditors. Just contact them and negotiate. In fact, even if you negotiate a reduced interest rate, if you spread your payments out over a longer period you may incur additional costs. But a special debt repayment arrangement can make your life easier, and by honouring your commitments, you minimize the negative impact on your credit rating.

Things to do and to remember…

  • Before calling your creditors, determine which you think will be open to negotiation and which debts could have the biggest impact on your budget.
  • Refer to your budget. Your worksheet can be a useful tool to help manage the payments you have to make. Since this worksheet includes a complete list of your creditors, account numbers, account balances, monthly payments and payment due dates, it can help you plan your proposal. It will help you determine who you should pay and when, as well as what commitments you are able to make.
  • When contacting your creditors by telephone, make sure you write down the name and contact information of the people you speak with. You will need this information if you have to contact them again.
  • Make a clear proposal, based on your budget and how much you are actually able to repay.
  • Clearly explain your financial situation to your creditor so that they fully understand the extent of the difficulties you are facing. The key to success is to show good faith and your commitment to repay your debts. By showing that you are able to repay your debts, based on the budget you have prepared and with their cooperation, it will be easier for you to reach an agreement with your creditor.
  • It is advisable to get a written confirmation of the agreement. You can prepare a brief summary of your telephone conversation and send it to the person you spoke with (by fax or by registered mail). If the creditor does not honour the commitments made to you, contact the person that you spoke with again to find out why and how to rectify the situation, if required. Having a copy of the letter of agreement will facilitate the discussion.
  • If you would prefer not to contact your creditor by telephone, you can always send a letter by registered mail explaining your situation and the arrangement you are proposing. Download the sample letter.
  • Whatever method you choose (telephone or mail), be polite but persistent. Creditors will probably be less inclined to help you if you are aggressive, and remember, they are not obliged to make special arrangements with you.
  • If, after making the arrangements, you are no longer able to honour your part of the agreement, call your creditor as soon as possible and explain your new situation. You must try hard to maintain a good relationship with the person with whom you made the arrangements.

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Advantages and disadvantages of contacting your creditors yourself


This option can help you get through a temporary crisis and help you follow your budget goals during this time.

This option works well if you do not have many creditors.


Creditors will keep a record of the information you provided regarding your financial situation. They or other creditors may refuse to extend you credit or may limit your credit in the future.

You will pay more in interest charges if the debt repayment period is extended and there is no reduction in your interest rate.

B) Contacting your creditors through a debt management program

What does it mean?

A debt management program is a service you can register for through a not-for-profit organization or a private company. By using this service, you authorize a counsellor to speak to creditors on your behalf in order to make special arrangements with them regarding your payments. In most cases, you will have to make one regular payment to your counsellor, who will look after dividing the agreed upon amounts among your creditors. You can decide which creditors you want the organization (budget counselling service) or company to contact on your behalf (in Atlantic Canada, all unsecured creditors must be included in the Debt Management Program). Once again, your budget will help you determine which creditors you should make include.

How much does it cost?

Depending on the province or territory in which you live and the organization you consult, this service may be free or may involve a fee. The fees vary based on the services offered. It may be a fixed fee, an hourly rate, a percentage of the payments made, or a combination of all three. Contact the organizations or the companies offering these services to find out how much they charge. Ask them to mail you a fee schedule. Before signing a contract, make sure it includes all the services discussed and the exact costs you will have to pay. It is a good idea to get a quote from more than one service before making your decision.

Things to do and to remember…

Advantages and disadvantages of contacting your creditors through a debt management program


Some creditors endorse this type of service and your counsellor may therefore achieve better results than if you contact your creditors yourself. Your counsellor may, in some cases, be able to have interest charges reduced or waived and payment terms and amounts modified.

While you are taking part in a debt management program, your creditors will contact your counsellor if any problems arise. This does not, however, prevent you from getting in touch with them directly if you foresee any problems or are able to repay them as a result of additional income.

It saves you a lot of time (and possibly stress), as the counsellor makes all the phone calls and does all the negotiating.


This option is a voluntary arrangement between you and your creditors; as a result, there is nothing stopping them from taking legal action against you or from terminating any arrangement you have since they are not legally obligated to help you. Nonetheless, most creditors will agree to help you since their ultimate goal is to recover as much of the money owing to them as they can.

You have to agree with the organization not to incur further debt while on this program .1

You will likely face additional costs: higher interest charges arising from a longer debt repayment period and the cost (if any) of using a debt management service.

Where is this service available?

You can contact one of the organizations below to get more information about contacting your creditors.

Government Services

Nova Scotia

Debtor Assistance Program
This program is provided by Service Nova Scotia and Municipal Relations.

Service Nova Scotia and Municipal Relations
Tel.: 902-424-5200
Toll free: 1-800-670-4357
SNSMR's Debtor Assistance Program Website


Provincial Mediation Board
Offered by the Saskatchewan Justice Department, this Board provides budgeting advice and counselling services.

Tel.: 306-787-5387
Toll free: 1-888-215-2222
Fax: 306-787-5574

Tel.: 306-933-6520
Toll free: 1-888-215-2222
Fax: 306-933-7030
Saskatchewan's Provincial Mediation Board Website

Non-profit Organizations


Ontario Association of Credit Counselling Services (OACCS)
OACCS is a registered charity that represents a membership network of not-for-profit credit counselling agencies.

Tel.: 1-888-7-IN DEBT
OACCS' Website


Union des consommateurs
Union is a consumer organization made up of 10 ACEFs (Association cooperative d'économie familiale) as members.

Tel.: 514-521-6820
Outside Montreal: 1-888-521-6820
Union des consommateurs's Website
(in French only)

Coalition des associations de consommateurs du Québec
The CACQ is a national group of consumer associations of which, 22 organizations that provide credit counselling services are members.

Tel.: 514-362-8623
CACQ's Website
(in French only)

For all other Provinces and Territories

Credit Counselling Canada (CCC)

CCC is a national association of not-for-profit credit counselling agencies which includes members that serve all provinces and territories. To find the agency nearest you, visit Credit Counselling Canada's Website

Other Organizations

Information on other non-profit organizations and for-profit companies that provide credit counselling services can be found in your local phone book.

You can also call your consumer protection association, the ministry that oversees consumer protection in your province / territory or the Better Business Bureau to see if any complaints have been filed against the person or company you are planning to deal with.

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1 Debt Management Program, Credit Counselling Services of Atlantic Canada Inc. Back to text