Debtor Assistance and Debt Advice: The Role of the Canadian Credit Counselling Industry

Annual Review of Insolvency, Forthcoming

Osgoode CLPE Research Paper No. 30/2011

37 Pages Posted: 22 Dec 2011

See all articles by Stephanie Ben-Ishai

Stephanie Ben-Ishai

Osgoode Hall Law School

Saul Schwartz

Carleton University; IZA Institute of Labor Economics

Date Written: October 9, 2011


A continuing theme of our work, and that of others, has been the failure of insolvency law to keep pace with the new problems faced by low-income debtors. Researchers have suggested that the cost of personal bankruptcy puts it beyond the reach of many of those in need of it, though it has proven difficult to demonstrate conclusively that large numbers of low income debtors would take advantage of bankruptcy if the price was lower. In this paper, we analyze another industry — the not-for-profit credit counselling industry — that has grown rapidly in recent years and that offers a different sort of remedy for financial distress.

We begin in Section II with a brief history of the credit counseling industry in Canada and in the US. We show how the industry has evolved from a small set of government-subsidized and community-based not-for-profit groups into an industry that is heavily subsidized by credit suppliers and, for the most part, lacking any significant community connection. In Section III, we briefly set out the regulatory framework that seems to encompass credit counselling agencies (“CCA”), both for-profit and not-for-profit. We do not, however, reach any conclusions on the application of this framework to Canadian CCA. Instead, we describe the concepts underlying the framework in a coordinated way. In Section IV, based on a set of "mystery calls" to the largest CCA, we show that most simply have nothing to offer low-income debtors and that most do not do a good job of providing information concerning the alternatives available to them. Rather than introducing substantive legislative or legal rules to help low-income debtors, the Canadian federal government has chosen instead to promote financial education with its 2010 Task Force on Financial Literacy. In Section V, we briefly analyze the Task Force process, suggesting that it largely overlooked the needs of the poor.

Keywords: insolvency, bankruptcy, debt, commercial law, law and finance

Suggested Citation

Ben-Ishai, Stephanie and Schwartz, Saul, Debtor Assistance and Debt Advice: The Role of the Canadian Credit Counselling Industry (October 9, 2011). Annual Review of Insolvency, Forthcoming, Osgoode CLPE Research Paper No. 30/2011, Available at SSRN: or

Stephanie Ben-Ishai (Contact Author)

Osgoode Hall Law School ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3

Saul Schwartz

Carleton University ( email )

1125 colonel By Drive
Ottawa, Ontario K1S 5B6

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

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