Credit counselling vs debt consolidation: how they differ

What each one is

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  Credit counselling is an advisory service. A non-profit credit counselling agency reviews your budget and debts and can set up a structured repayment plan, often a debt management plan, where the agency arranges one monthly payment with reduced or waived interest. It is guidance and a plan, not a loan. For the full picture, read about credit counselling and other alternatives.
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  Debt consolidation is a borrowing product. You take one new loan, such as a consolidation loan, a line of credit, or a balance transfer, and use it to pay off several debts, leaving one payment to manage. You still repay the full amount, ideally at a lower interest rate. Read more on how debt consolidation works.

The heart of the difference is simple: credit counselling is advice and a plan, consolidation is a loan.

Who each option tends to fit

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  Credit counselling may fit if you want guidance and a structured plan, your debts are mostly unsecured, and you may not qualify for a good consolidation rate. The interest relief comes through the agency's arrangement with creditors rather than through a new loan.
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  Consolidation may fit if you qualify for a lower-rate loan and can comfortably manage a single payment. It keeps you repaying the full amount, just on better terms, without involving a counselling agency.

What DACL does, and what we do not do

DACL is a debt assessment and referral service. We review your situation, explain how credit counselling and consolidation compare, and refer you to the right professional. We are not a credit counsellor, we are not a lender, and we are not a Licensed Insolvency Trustee. Where counselling fits, we point you to an agency. Where consolidation fits, we point you toward that route.