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Many people feel unsure what to look for, consider, or even where to start when evaluating resources they have to manage debt. Fortunately, you are not alone in navigating these decisions. Every day Licensed Insolvency Trustees help individuals do just this, providing expertise and guidance to help consumers move forward with confidence. Read on to learn about some common debt solutions available to consumers, key points highlighting the pros and cons of each – and what you should avoid when choosing a debt management plan.

Dealing with debt can feel frustrating, but the truth is that debt is often a problem like many others in that it does have solutions – and knowing is not owing! 

Types of Debt Management Plans 

Debt management plans for personal debt generally fall under one of the following categories:

  • Do-it-Yourself Debt Repayment Plans
  • Informal Debt Repayment Plans
  • Formal Debt Management and Debt Relief Solutions

As Licensed Insolvency Trustees, one of our key services is providing consumers a complete, unbiased overview of all their options and resources to help them deal with their debt, tailored to each person’s situation. In less than an hour we can help you with a personalized debt-free plan that’s right for you.

Depending on your specific situation, unique needs, and personal goals, you might have several solutions and tools to consider implementing as part of your debt management plan – including five of the most common types of consumer debt solutions detailed below.

Do-it-Yourself Debt Management – Pros and Cons

Some debt repayment strategies you might undertake on your own as part of a self-directed plan could include solutions such as: 

Paying Your Debt Off in Full


  • Beyond a balanced personal budget and the ability to stick to it, no outside help is needed.
  • You may be able to informally negotiate with your lenders to get reduced interest rates on your various accounts.
    • Be sure to ask about any credit rating impacts if your interest rates are reduced.


  • If it’s difficult for you to consistently pay substantially more than your minimum monthly payment requirements each month, it could take a long time to see a zero balance on your debts.
  • Without ample savings, even a small upset or added demand in your budget can easily derail your plans and set you back in your debt-free goals.

How to Balance Your Budget to Pay Off Debt and Cut Money Stress – Learn More 

Refinancing with a Consolidation Loan


  • Consolidation loans typically have a lower interest rate than credit cards, and this may reduce your total interest costs as you work on clearing your debt.
  • No more juggling multiple debts and payment due dates.


  • Consolidation loans, especially at ‘best rates’, are often difficult to qualify for. Most people will need to pledge an asset as collateral against the loan, or get a co-signer, and both of these approaches can be risky.
  • You’ll be repaying eligible debts in full – with interest, which means your payments (even with a reduced interest rate) can still be difficult to afford, and carrying debt remains expensive.

Additional Tips for Success:

  • You may also be able to get out of debt faster with a combination of ‘do-it-yourself’ payments and resources, such as BC’s Statute of Limitations, Request for Communication in Writing and more.
    • A local Licensed Insolvency Trustee in your province will be able to guide you in this.
  • Avoid using your credit accounts while you work on paying down your existing debt. Continuing to rely on credit after taking out a consolidation loan often results in a bigger debt problem since you’ll now have a consolidation loan and credit card bills to pay. 

Learn More about Why Borrowing Isn’t Always Best for Consolidating Debt

Credit Counselling and Debt Settlement – Pros and Cons

As a Canadian consumer it’s important to be aware that although there are different types of debt help agents operating in the market and offering debt solutions, they are not created equal – and some come with significant ‘buyer beware’ disclaimers. One common (informal) debt repayment solution you might be aware of is:

Using a Credit Counselling Service


  • If you only have a small amount of basic consumer debt you may be able to simplify your finances by consolidating eligible debts in an informal credit counselling plan that requires monthly payments for up to five years.
  • You’ll pay off all your debt, but eligible creditors may agree to stop charging interest.
  • It’s much easier to qualify for a credit counselling program than a consolidation loan, and you won’t need to use an asset as security or get a co-signer.
  • Educational resources and workshops for money management may be available as part of the credit counselling process.


  • Creditors who turn down your credit counselling debt repayment plan must be paid separately.
  • A fee is charged for credit counselling services on top of the settlement payments to your creditors. Even if you receive relief from future interest charges, you may not cut payments substantially since you will be paying a fee on top of paying back 100% of your debt to your creditors.
    • No government body regulates credit counsellor qualifications, fees or dispute mechanisms.
  • Credit counselling organizations are heavily bank-funded and some are registered as collection agents, which creates a conflict of objectives / conflict of interest.
  • Your credit history will reflect your credit counselling plan for two to three years after you have repaid all the accounts included in your credit counselling plan.

Debt settlement agents may call themselves credit counsellors, but their debt repayment plans usually differ in that they offer services to settle your debts one account at a time for less than you owe by negotiating a lump sum payment that is typically less than the balance owing. (You can also attempt this type of settlement on your own if you have a lump sum available.) 

Credit Counselling or Debt Settlement? What’s the Difference? Learn More

Credit Counselling Cautions to Note:

  • Credit counselling is an informal (i.e., not legally regulated) option – anyone can call themself a credit counsellor without any specific training, so the onus is on the consumer to always do their due diligence.
  • Agents who provide informal debt repayment plans cannot offer you any protection from your creditors and neither debt settlement agents nor credit counsellors can compel your creditors to accept their services / your offer.
    • Creditors aren’t legally bound by these offers; they can continue collection action or even escalate collection efforts.
  • Most debt settlement agents charge a high fee for their services, and all credit counselling plans have a cost, even if you are working with a non-profit agency.
  • Don’t be fooled by misleading advertisements – there is no such thing as a “government debt grant” or “government debt program”.
    • The only government-approved debt solutions or providers in Canada are the legal debt management options available by working with a Licensed Insolvency Trustee.

All Licensed Insolvency Trustees in Canada offer free, confidential debt consultations – simply reach out directly to a local Licensed Insolvency Trustee in your province.

Learn More About Canadian Debt Relief Services 

Debt Relief and Consumer Proposals – Pros and Cons 

Canadians have two kinds of formal debt management and debt relief options to consider, making a legal debt solution a good choice to help pay off debt for a variety of situations and financials goals.

Making a Consumer Proposal 


  • You can write-off a large portion (often up to 50-80% or more) of your consolidated debts (including government debts) with no interest charges or additional costs of administration.
  • Legally prevents your creditors from contacting you for payments or continuing collection actions or wage garnishments.
  • Flexible payment terms based on household income.
  • Professional fees are included in what you repay – no fees added to your settlement offer.
  • Can be paid off in full at any time without penalty.
  • Credit rebuilding tools and one-on-one money management education with a qualified financial counsellor are included in the process.


  • Your credit history will temporarily reflect that you did a Consumer Proposal, for three years after you have completed the Consumer Proposal, or six years from the date you started it (whichever comes first).
    • Most people establish a positive credit history within a year or less, and you can apply for and receive new credit any time. Prepaid and secured credit card products are also always available.

10 Facts You Should Know About Consumer Proposals – Learn More

Filing for Personal Bankruptcy


  • You may write-off as much as 100% of all your debts with zero interest.
  • Bars creditors from contact, collection activity or wage garnishments.
  • Most people who are considered to have a ‘low-income’ will only pay an administrative fee of $2,700 (broken into a manageable payment plan).
  • The bankruptcy process typically lasts only nine months – the fastest time to “debt-free” compared to other options.
  • Financial management tools and credit coaching with a qualified financial counsellor are included in the process.


  • Your credit history will reflect your bankruptcy filing for six years following your discharge (exit) from bankruptcy. However, with the right actions most people are successful in establishing new credit within one year after a bankruptcy proceeding (if not sooner).
    • If other options are unsuitable, the ‘reset’ of bankruptcy generally provides a quicker path to rebuilding your credit history, and overall finances.

To Use a Legal Debt Solution:

  • Only a Licensed Insolvency Trustee is authorized to help you with legal debt solutions that can forgive a portion, or all, of your debt.
    • Don’t be confused by advertising for informal debt management plans that is made to sound like a Consumer Proposal, always ask “Are you a Licensed Insolvency Trustee?”
  • You don’t need to get or pay for any of the following:
    • A referral to speak with a Licensed Insolvency Trustee
    • Any ‘add-on’ service when you’re working with a Licensed Insolvency Trustee
    • Financing to do a Consumer Proposal

Don’t rely on second-hand advice or information, take an hour to talk with a Licensed Insolvency Trustee about your specific situation and options. We often help people who waited months or even years before reaching out because they had the wrong advice or incorrect information.

When is Filing for Personal Bankruptcy the Best Option? Learn More

Getting Reliable Debt Advice from a Qualified Professional 

There’s a lot to consider in deciding how to deal with your debt and understanding which solution is the best for you and your situation, but you are not alone – Licensed Insolvency Trustees are here to help break the information down, offering you support in making a choice to move forward.

Licensed Insolvency Trustees are the only federally regulated debt professionals, and we hold a unique designation and endorsement, with a specific skillset and knowledge that allows us to offer complete debt help services to consumers and business owners dealing with debt.

There are many reasons why you might want to seek debt advice from a Licensed Insolvency Trustee, including (but not limited to):

  • Understanding your rights and remedies when it comes to your debt, with solutions for everything from credit cards to personal loans, payday loans to CERB debt and beyond.
  • Knowing what you can do when you cannot pay a debt, or whether a debt is collectable.
  • Seeking debt relief, including protection from creditors pursuing you with court actions and garnishments.

Get started with your debt-free plan by contacting a Licensed Insolvency Trustee local to your province to set up a free, confidential consultation. If you’re in BC, Sands & Associates can help you from one of our local offices, or a convenient phone or video appointment.

At the end of your consultation, you should have a better understanding of your situation and your options, with a clear outline of your next steps. Taking the first step of asking for help can be one of the toughest – but it’s worth it, and there is light at the end of the tunnel.

Ready to get started? Understand, compare, and choose your best debt option with the help of a caring, licensed debt help professional at Sands & Associates. Book your free consultation now!