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The Orderly Payment of Debts Program and How It Might Help You

Do your debts feel out of control? Struggling with debt can have a detrimental effect on your mental wellbeing and leave you feeling isolated. But there are debt solutions available to offer you the fresh start that you deserve. 

If you’re looking for a way to manage your debt, an Orderly Payment of Debts (OPD), also known as a Consolidation Order, may help you. An OPD is a form of debt consolidation and alternative to Bankruptcy that is available in Alberta, Saskatchewan, Prince Edward Island and Nova Scotia. With an OPD, the provincial court combines all your debts into one payment and will make sure that repayments are made to your creditors on your behalf. 

Before you make a decision, discuss your options with a Licensed Insolvency Trustee (LIT). They can help to take some weight off your shoulders. LITs are licensed and regulated by the federal government to offer all types of debt solutions. With their guidance, you can decide on the best form of debt relief to suit your personal situation.

What is an Orderly Payment of Debts?  

An Orderly Payment of Debts (OPD) or a Consolidation Order, is a form of debt management legislated under the Bankruptcy & Insolvency Act. It is managed by credit counselling agencies and is only available to those living in Alberta, Saskatchewan, Prince Edward Island and Nova Scotia.

An OPD involves a designated provincial body filing an application on your behalf to the court. The order will consolidate your unsecured debts into one monthly payment and use that money to pay your creditors back directly. The amount will be equal to the total amount of unsecured debt you owe, with an interest rate of 5%. You’ll then pay the amount back over a period of up to three years.

How does an Orderly Payment of Debts work?

An OPD can help you to manage your debt repayments by consolidating several debts into one payment. Here’s how an Orderly Payment of Debts works:

1. Contact your local administrator

If you live in one of the applicable provinces (Alberta, Saskatchewan, Prince Edward Island or Nova Scotia), you can contact the local organization who administers the OPD program in your province. 

2. File your application

Your administrator will then make your court application on your behalf for an Orderly Payment of Debts, otherwise known as a Consolidation Order. The order will consolidate your debts and fix the interest rate you pay at 5%. It will also implement a stay of proceedings, which stops your creditors from being able to make debt collection efforts, such as taking legal action against you, or collection calls.

3. Make your payments

The provincial court will combine your debts into one and decide on the amount you must pay to the court periodically. You will then make regular monthly payments to clear your debt. The amount you pay each month is based on your individual circumstances, and this money will be divided among your creditors. 

Difference between an OPD and a Consumer Proposal

An Orderly Payment of Debts and a Consumer Proposal both work to consolidate your debt and help make your debt repayments feel more manageable. 

Here we’ve compared an OPD and a Consumer Proposal to help you decide on the best form of debt relief for you.

  • Cost: An OPD is often more expensive than a Consumer Proposal, as you are required to pay your debt back in full with a fixed 5% interest rate on top. Whereas with a Consumer Proposal, you will usually repay a portion of your outstanding debt and your creditors will forgive the remaining amount. But for some people, it is the high interest rates of multiple debts that means they cannot afford to repay their debt. An OPD offers one fixed interest rate, which may make paying debt back in full possible and more affordable.
  • Credit rating: Both an OPD and a Consumer Proposal have a similar impact on your credit rating. Both will be reflected on your credit report as R7, which is only two points lower than an R9, which would be applied if you were to file for Bankruptcy. The R7 will typically be removed after two years, as long as you complete the OPD program. 
  • Creditor protection: An OPD and a Consumer Proposal offer the same creditor protection, known as a stay of proceedings. This means you are protected against wage garnishment, debt collection calls and debt-related legal action.

Is an Orderly Payment of Debts program right for me?

Whether an OPD is the best form of debt relief for your situation will depend on your personal circumstances. Can you afford to keep up with the monthly payments of an OPD? Would an alternative suit you better? 

Here are some factors to consider to assess if an OPD will suit you:

  • You can afford to pay back your debt in full but have trouble managing your finances due to other issues, such as high interest rates.
  • You cannot qualify for a consolidation loan.
  • Your debt is small enough whereby a Consumer Proposal would cost you more money than necessary.

Consulting with an LIT can help you assess whether an OPD is the right choice for your financial situation. After all, debt is a serious matter so it’s important that you receive unbiased advice from a professional you can trust. 

Ready to say goodbye to your debt?

Looking for a way out of debt but not sure where to start? Consulting an LIT can help put things into perspective and bring clarity to a difficult situation. Here at Allan Marshall & Associates, we’ve been helping people just like you to manage their debt since 1979. It’s never too late to improve your financial wellbeing. 

Contact us today for a free consultation to discuss your debt relief options. We can help.