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One of the first options that many people consider when faced with a debt problem is debt consolidation.  Debt consolidation normally means:

  • You make a single monthly payment to cover all of your unsecured debts
  • You are required to repay all of your debts in full, with interest
  • A single bank steps forward to pay off all of your other debts, and you repay the bank a lower rate of interest than you would have been paying on the individual debts

Debt consolidation can be achieved a few different ways in Canada, with the general goal of combining multiple debts into one manageable monthly payment.

Types of Debt Consolidation

Debt consolidation loans through a bank are often difficult to qualify for. Normally a lender will pay off your individual debts and roll the combined balance into a loan that will be repaid with interest. The typical benefit of a consolidation loan is that the interest rate will be lower (ie. 12% instead of perhaps 20%).

The challenge for many people is that consolidation loan lenders will often want you to pledge an asset as collateral for the loan (such as a vehicle, or even your home), require a co-signer for the consolidation loan, or require you to have a high income and/or high credit rating to qualify.

Because of these requirements, many people will not qualify for a traditional bank consolidation loan.

If you do not qualify for a bank’s debt help consolidation loan, debt consolidation may be possible using a debt consolidation program, such as:

consumer-proposals-icon-2A Consumer Proposal

Consumer Proposals are a legal debt consolidation arrangement, or debt settlement, with your creditors and allow you to repay only a portion of your consolidated debts, in full settlement. Interest is automatically stopped under a Consumer Proposal, and if any creditors have begun collection action, they must stop immediately.

Consumer Proposals allow you to reduce the debts you owe, restructure the time you have to pay off all your debts, or some combination of both, without accumulating interest or paying additional fees. Credit ratings are not a factor in order to qualify for a Consumer Proposal consolidation.

For example, a Consumer Proposal to settle consolidated debts totalling $40,000 might offer your creditors $12,600, which you would pay by way of $350 per month for 36 months. 

Consumer Proposals to creditors are an increasingly popular solution to consolidate and deal with accumulated or unmanageable debts and are the number one alternative to personal bankruptcy. They must be filed by a Licensed Insolvency Trustee and can have great benefits over traditional credit counselling programs or debt consolidation loans.

A Licensed Insolvency Trustee at Sands & Associates will work with you to tailor a proposal to your creditors that fits your household budget and personal circumstances – it is common for debts to be reduced by 30-80% in full settlement.

Learn more about Consumer Proposals.

personal-bankruptcy-iconA Credit Counselling Debt Management Plan

Debt counsellors and non-profit credit counsellors will offer to make arrangements with your creditors for you to pay off your debts in full. The counsellor will review your financial situation and coordinate a payment program between you and your creditors.

Unregulated fees and other miscellaneous charges are typically charged by the counsellor/agency in order to perform this debt service. It should be noted that not all creditors will accept traditional or non-profit credit counselling offers; for example, government debts can only be settled or reduced by way of a Consumer Proposal (or Personal Bankruptcy).

Although for profit and non-profit credit counselling plans require to you repay your debts in full, the impact to your credit history will be the same as filing a Consumer Proposal.

  Contacting Your Creditors

Explain why you cannot make your debt payments and suggest an arrangement that could work for both of you. While this will not consolidate debt, you may be surprised that some creditors are willing to cooperate and even reduce your interest payments.

Compare key debt help services!



What’s the difference between Consumer Proposal and traditional credit counselling?

Learn More



What are the Consumer Proposal pros and cons compared to bankruptcy?

Learn More



What are some advantages of bankruptcy over non-profit credit counselling?

Learn More

Looking for something specific? Check our FAQs sections for commonly asked questions about Consumer Proposals, Personal Bankruptcy, and Debt Help in BC.

You can be debt-free and achieve a financial fresh start!

Options for Dealing with Debt — Where to Get Debt Help

Many people struggling with debt management feel that personal bankruptcy is their only option – this may not be the case! A Licensed Insolvency Trustee will meet with you at no charge to help you assess your debt and evaluate whether there are other ways of solving your financial challenges that can help you avoid bankruptcy. Licensed Insolvency Trustees (formerly known as Trustees in Bankruptcy) are the only people endorsed by the Canadian government and regulated under federal law to provide debt help.

What is Bankruptcy?

Bankruptcy is a process that is often misunderstood, and there are many myths surrounding filing bankruptcy. Bankruptcy is a legal option for both consumers and businesses that alleviates their debt, allowing them to start again, debt-free. Most people who file a personal bankruptcy are “in bankruptcy” for only 9 months, they keep all their assets and can rebuild a favourable credit rating in as little as 2-3 years afterwards. You do not need to gain permission from your creditors to file for bankruptcy, or claim bankruptcy protection. Learn more about Personal Bankruptcy.

Compare Four Options to Eliminate Debt using our online Debt Options Calculator.

A Sands & Associates representative can provide you with more information about any of these debt management options in a one-on-one, no obligation consultation. Our professional staff are here to help guide you through debt solutions based on your individual situation and needs.

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