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Many people struggling to manage their monthly debt payments or pay off their debt balances in full don’t know where to turn for help. As Licensed Insolvency Trustees, debt help is what we do! Read on to learn about different strategies and resources Canadian consumers have for debt relief, and how you can safely explore all your options with a professional for free.

Canadian Debt Relief Options

Informally and formally, there are different options that can provide varying degrees of debt relief for an individual. Not every option will be suitable for the debt relief you need – it’s critical that you weigh how each solution works against your specific situation, needs, and goals. Don’t simply settle for an option that doesn’t offer enough benefit for you!

Some people may need debt relief only in the form of a consolidation loan with a consistent interest rate, while others may find their best debt solution is a Consumer Proposal that combines consolidation with debt reduction and a streamlined repayment plan.

Here are some common debt management strategies you might consider if you live in Canada, and the overall measure of debt relief you might expect:

Informal Debt Solutions

Debt Consolidation Loans: Combining your debts into one new bank loan (or sometimes line of credit) can offer some relief in that:

  • The interest rate is consistent (and hopefully lower) across all (now combined) debts
  • Payments and a pay-off plan are (usually) set, taking the guesswork out of juggling multiple payments and a completely DIY repayment approach

Borrowing as a debt solution is not without potential challenges. Consolidation loans can pose problems of their own and at the end of the day you are still repaying all your debts in full, with interest:

  • You need to qualify for a loan that has a reasonable interest rate. Often this is not possible without an asset to pledge as security on the loan, or a co-signer (and both can be risky!).
  • If you qualify for a loan with a better interest rate than you are currently paying, your payments may still be high. You need to ensure you can afford to consistently make those payments for the entire duration of your borrowing agreement.
    • Don’t overestimate your ability to meet payment requirements, pay your regular costs of living and have funds left over for savings in case of emergency. Many people find they end up with a consolidation loan and a new balance on their credit cards because they have not taken a realistic look at their monthly income and expenses.

Borrowing Isn’t Always Best for Consolidating Debt – Read More

Credit Counselling Plans: A credit counselling repayment plan may offer relief from ongoing interest charges on debts eligible to be managed through this type of informal plan:

  • You can combine many basic consumer debts into a credit counselling plan that runs over a period up to five years
  • Creditors often (but not always) agree to stop charging interest on the eligible debts
  • Many credit counsellors offer resources to help you boost your financial skills and knowledge

Credit counselling can have some drawbacks however, including:

  • Credit counselling plans have a cost, even if you are working with a non-profit agency (non-profit does not mean all services are free). Even with the relief of future interest charges, you may not cut payments substantially since you will be paying a credit counselling fee on top of paying back all your debt to your creditors.
  • There are several common debts, including all types of government debts, that aren’t eligible for credit counselling plans.

Many people are unaware that credit counselling is an informal (i.e. NOT legally regulated) debt relief option – anyone can call themself a credit counsellor without any specific training, and there are many aspects of this type of service that are not well supervised.

Debt Settlement Agreements: Debt settlement agents offer services for debt relief by attempting to settle your debt (usually one account at a time) for less than you owe by offering a one-time, lump sum payment that is typically substantially less than the total balance owing. You can also attempt this type of settlement on your own if you already have a lump sum of money.

Proceed with extreme caution when it comes to companies offering these debt negotiation services:

  • Most will charge a high fee for their services
  • Like credit counsellors, there is little oversight for these informal types of debt services
  • Because most people need time to save up a lump sum to offer a creditor and are directed to stop paying their debts while they do so, creditors often escalate collection action in the meantime.
    • Agents 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.

Debt Management – or Debt Mistake? Learn More

Don’t be fooled by advertising – there is no such thing as ‘fast credit repair’ or ‘government debt programs’ ‘government debt grants’ etc. Similarly, clearing your credit history and boosting your credit score simply takes time and some thoughtful strategy, there’s no magic solution to discover.

A few provinces have debt payment alternatives such as Alberta’s Orderly Payment of Debts and Voluntary Deposit in Quebec, but as far as ‘government-approved’ ways to clear debt, the only methods in Canada are the legal debt relief options available by working with a Licensed Insolvency Trustee.

Formal (Legal) Debt Solutions

As Licensed Insolvency Trustees we work with many people who arrive discouraged and/or frustrated because they tried a credit counselling plan or have taken out a consolidation loan to no real success. Even if you’ve tried an informal solution before but not been able to get out of debt, don’t underestimate the huge advantage of the debt relief available through a formal solution working alongside a Licensed Insolvency Trustee.

Consumer Proposals: This legal, non-borrowing consolidation solution offers several considerable debt relief measures. Working with a Licensed Insolvency Trustee you can file a Consumer Proposal that will:

  • Consolidate virtually all types of debt (consumer, business, and government debts) with no interest or other added costs
  • Offer to repay your creditors the portion of your debt that you can afford to repay, in full and final settlement (reductions of up to 50-80% of your total consolidated debts are common)
  • Legally stop creditors from pursuing you for payment, collections or charging interest
  • Give you a set repayment plan of up to five years with a clear debt-free end date

There are no fees added to what you pay back to your creditors in a Consumer Proposal. A tariff-based administrative charge will be paid from the money your creditors receive – all you pay is what you’re offering your creditors. For example:

  • A Consumer Proposal could consolidate your total debts of $40,000 by offering your creditors $12,600 (31.5% of the total balance outstanding), under which you would make payments of $350 per month for 36 months.
    • No added fees, no interest, no borrowing
    • Immediate relief from creditors
    • Pay off your Consumer Proposal early at any time without penalty

How Much Debt Can a Consumer Proposal Write-Off? Learn More

Consumer Proposals are almost always accepted by creditors and you’ll have the ongoing support of a Licensed Insolvency Trustee throughout the process, including access to one-on-one financial counselling sessions and professional resources.

In situations where it is just not possible to make meaningful repayment on your debts, the final option for debt relief that you may consider is…

Bankruptcy: Personal bankruptcy is a short duration and relatively straightforward process that offers immediate debt relief and can result in 100% forgiveness of all your debts. This often-misunderstood process can provide a financial fresh start in as little as nine months.


To explore all your options and get trustworthy advice about dealing with your debt, a Licensed Insolvency Trustee is the right professional to help you.

Why Work with a Licensed Insolvency Trustee?

Licensed Insolvency Trustees are fully government-regulated and endorsed debt help experts. We are empowered to serve Canadians with a range of debt management services and are the only professionals with the power to provide legal solutions that can allow you to have virtually all your debts forgiven – from credit cards to payday loans, outstanding tax debt to lines of credit and so on.

You don’t need to be dealing with an extreme situation, like not being able to make your payments or being sued by a creditor, to seek support from a Licensed Insolvency Trustee. Although we can stop drastic actions such as a wage garnishment or court process, we always encourage you to seek a Licensed Insolvency Trustee for support as early as possible. Doing so can save considerable stress and worry, not to mention time and money!

Difficulties paying down debt are often shrugged off as ‘normal’, but the reality is that common debt problems like these can be overwhelming – and keep you in debt for years. Does any of the following sound familiar to you?

  • You’re not able to pay much more than the required minimum monthly payments on your credit card or other balances
  • You make payments then use credit again, effectively keeping you in a cycle of debt dependence
  • You’ve consolidated your debt with a loan or other product but still feel financially squeezed
  • You feel like lingering debts with ‘bad credit’ or ‘past money mistakes’ are preventing you from moving forward with your financial goals or other milestones
  • You’re stressed out, anxious or overwhelmed by your debt situation
  • Your current pace of repayment will have you paying (non-mortgage) debt for more than five years

No matter what your personal circumstances, know that debt is a problem like any other in that it does have solutions – and we’re here to help you find the one that’s right for you. 

Connect with a Licensed Insolvency Trustee in BC

Sands & Associates works with residents across BC and our services are available both online and in-person at local offices throughout the province. In less than hour we can help you better understand your situation, weigh the pros and cons of various debt solutions, and give you clear guidance on your next steps with the debt relief option you choose.

We want you to come away from your free debt consultation with a plan to move forward, and confidence that you are on your way with a solution to deal with your debt.

Debt help without judgment, it’s that simple! Get started with your debt-free plan by connecting with a caring expert from Sands & Associates today – book your free confidential consultation now.

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