Many Canadians are surprised to learn that there are options that allow you to consolidate debt under one repayment plan without borrowing. With very few qualifiers and little-to-no interest costs, consolidating without borrowing can have significant advantages to helping you get out of debt – but not all solutions are created equal.

Non-Borrowing Debt Solutions – Understand the Key Differences

As you compare and assess the debt management strategies available to you it is important to understand that although there are many types of debt help providers offering services, the Federal and Provincial governments only legally endorse, regulate and support the services and solutions that Licensed Insolvency Trustees provide.

There are many advantages that often make a Consumer Proposal a significantly better option for debt consolidation than taking out a traditional consolidation loan or working within a non-profit credit counselling debt repayment plan.

While advertisements and ‘programs’ available through providers such as debt settlement agents and credit counsellors may sound a lot like a Consumer Proposal – they are in fact not the same process and will not afford you the important benefits of Consumer Proposals, nor of working with a qualified Licensed Insolvency Trustee.

It should never cost you money to connect with a Licensed Insolvency Trustee and no referral is required to book a free debt consultation or discuss options for a debt-free plan. Confidential debt consultations with a BC Licensed Insolvency Trustee can be done via phone or video conferencing at your convenience.

Below is a summary of some of the main points of differentiation between working with a Licensed Insolvency Trustee to consolidate your debt with a Consumer Proposal and choosing a credit counselling debt repayment plan.

Consumer Proposal
VS. Credit Counselling

When it comes to options for dealing with debt, making a Consumer Proposal through a Licensed Insolvency Trustee can be a better choice than opting into a Credit Counselling program.

We’ve outlined key points comparing the two, some of which may come as a surprise.

Consumer Proposal
Credit Counselling
How Much Debt Repaid?

Total amount of debt can be reduced. Reductions of 70-80% of total debts are most common.

Interest automatically frozen by law on all debt, including tax debts and student loans.

Generally required to repay 100% of the debt.

Interest frozen by negotiation. Some creditors will not agree to an interest freeze. Tax debts and student loans will continue to charge interest.

Amount of Monthly Payment

Income levels and family size taken into account.

A Licensed Insolvency Trustee cannot file a Consumer Proposal that would result in undue hardship.



No set guidelines on maximum payment amount.

Typically higher payment terms than in a Consumer Proposal because 100% of debt is being repaid.

Administration Costs

All administration costs are included in the payment amount offered to creditors – no hidden fees.

Licensed Insolvency Trustee fees are set and regulated by the federal government.

Monthly monitoring and consultation fees, other levies may be charged in addition to monthly debt repayment.

Chargeable fees are unregulated.

Impact on Credit Rating

An R7 rating will be noted for 3 years after completion, or 6 years from the date of filing, whichever comes first.

An R7 rating will be noted for 2 years after completion.


Length of Time

Must be completed within 60 months. Terms of 24-48 months are most common.


Depends on size of debt and repayment. 5 year terms are common.

Creditor Agreement and Collections

Acceptance by 50% of voting creditors means all creditors are bound by Consumer Proposal terms and share monthly payment.

The ONLY method in Canada for reducing balance owing to Canada Revenue Agency.

Only a Licensed Insolvency Trustee can cease a wage garnishment, asset seizure and other collection action.

Contact from creditors must cease upon filing.

100% agreement by each creditor required, otherwise they must continue to be paid separately.

No ability to settle income tax debt for less than 100% of balance owing.

Creditors not in agreement with the plan may continue to pursue legal action or collection.

Creditors in agreement with the plan will typically refrain from contact while the plan is in good standing, but there is no legal authority to enforce this.

Advisor’s Qualifications

Licensed Insolvency Trustees are licensed by the federal government.

Overseen by the Office of the Superintendent of Bankruptcy.

Must comply with Code of Ethics and rules of professional conduct.

No set qualifications required to operate as a Credit Counsellor.

No regulatory body.

No dispute-resolution mechanism in place.