One Monthly Payment
Replace several due dates and balances with one easier-to-track payment.
Simplify your monthly debt payments
Combine Multiple Debts Into One Manageable Payment
Debt consolidation may help you simplify your finances by replacing several payments with one. Depending on the option available, it may also reduce your interest costs or monthly payment.
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Understanding the option
What Is Debt Consolidation?
Debt consolidation combines several debts into one new payment. This may be done through a consolidation loan, line of credit, balance transfer, or structured repayment arrangement.
The goal is usually to make repayment easier to manage and, where possible, reduce the total interest paid.
Debts commonly consolidated:
Credit cards
Personal loans
Lines of credit
Payday loans
Retail financing
Unsecured balances
The debts that can be included depend on the consolidation product and the lender or provider.
Potential benefits
Why People Consider Debt Consolidation
Consolidation can be useful when your debt is still repayable but the number of payments or interest costs have become difficult to manage.
Potentially Lower Interest
A lower rate may reduce the overall cost of repayment.
Clear Repayment Schedule
A fixed term can help you see when the debt may be fully repaid.
Simpler Budgeting
One predictable payment can make monthly cash flow easier to manage.
Fewer Missed Payments
Managing one account may reduce confusion and missed due dates.
Alternative to Insolvency
For some people, consolidation can resolve debt without filing a consumer proposal or bankruptcy.
Who may qualify
When Debt Consolidation May Be a Good Fit
Consolidation is generally most useful when you have enough income to repay your debt but want better terms or a simpler payment structure.
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You have steady income and can afford a regular monthly payment.
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Your debt is manageable but spread across several accounts.
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You may qualify for a lower rate than you currently pay.
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You want to simplify your finances without filing insolvency.
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You are committed to avoiding new debt while repaying the consolidated balance.
The process
How Debt Consolidation Works
Complete the Assessment
Share information about your debts, income, province, and monthly payment pressure.
Review Your Options
A qualified professional identifies which consolidation or debt-relief solutions may be available.
Compare Terms
Review the interest rate, payment amount, fees, and repayment timeline before proceeding.
Begin One Payment
Your eligible debts are combined or repaid, leaving you with one structured payment.
Compare your options
Debt Consolidation vs. Consumer Proposal
Debt Consolidation
Repay the full balance under new terms
- Usually requires sufficient income and creditworthiness
- May reduce interest or simplify payments
- You generally repay the full amount borrowed
- No formal insolvency filing
- Terms depend on lender approval
Consumer Proposal
Repay an agreed portion of unsecured debt
- May reduce the total amount repaid
- Interest stops on included debts
- Administered by a Licensed Insolvency Trustee
- Requires creditor approval
- Affects your credit profile
The best option depends on your income, credit, debt level, assets, and ability to repay. A qualified professional should review your situation.
Common questions
Debt Consolidation FAQs
Will debt consolidation lower my monthly payment?
It may. A lower interest rate or longer repayment term can reduce the monthly payment, although a longer term can increase total interest paid.
Do I need good credit to qualify?
Many traditional consolidation loans require acceptable credit and stable income. Other repayment options may have different requirements.
Does debt consolidation reduce the amount I owe?
A standard consolidation loan usually does not reduce the principal balance. It combines debts under new repayment terms.
Can I consolidate credit cards and payday loans?
These debts may be eligible, depending on the lender or consolidation program and your overall financial profile.
Will debt consolidation affect my credit?
Applying for new credit and closing or paying off accounts can affect your credit profile. The impact depends on your situation.
Is Clearwise Solutions a lender?
No. Clearwise Solutions helps Canadians explore their debt-relief options and connect with appropriate professionals or providers.
Clarity today, confidence tomorrow.
See Whether Debt Consolidation Could Simplify Your Finances
Complete our confidential assessment and take the first step toward understanding which repayment option may fit your situation.