If you’re finding your debt unmanageable, you aren’t alone. Many Canadians find themselves in a position where they are struggling to keep on top of their debt, due to rising interest rates and increasing inflation.
When faced with significant debt, it can feel difficult knowing where to turn. Are there free Canadian government grants for debt relief? Do these programs exist?
What Canadian government grants are available?
The Canadian government does not specifically offer free grants for those struggling with debt. However, there are some debt relief programs and services that are licensed by the government.
This means that the government regulates these services and monitors the associated fees. If you see Canadian government grants or loans advertised, they do not come directly from the government but they may function under their rules.
With this in mind, it’s important to be aware and cautious of scams and companies that claim they offer funds from the government. While they may be “government approved”, this doesn’t mean the grant or loan has come from the government or that they are any more reputable than other debt relief firms, which can be misleading.
How else can I reduce my debt?
While free Canadian government grants to help pay off debt aren’t a possibility, there are other forms of debt reduction available to help you take control of your finances. Discussing your situation with a Licensed Insolvency Trustee (LIT) can help you to assess all of your debt relief options and help find a solution for you. Here are some ways you can gain debt relief in Canada:
Filing a Consumer Proposal
One of the government debt relief programs in Canada is a Consumer Proposal – an alternative to filing for personal Bankruptcy. It is a legally binding agreement between you and your creditors to help you repay a percentage of your debt, in exchange for full debt forgiveness. The aim of a Consumer Proposal is to significantly reduce the amount of debt you repay over a repayment period, usually up to five years.
Once filed, a Consumer Proposal gives you a legal stay of proceedings which offers you immediate legal protection from your creditors and debt collectors. This can give you the peace of mind that you will no longer be contacted for debt repayments. You can only file a Consumer Proposal through a Licensed Insolvency Trustee ( LIT).
LIT’s are trained credit counsellors who can offer you money management advice and guidance to help you on your way towards financial stability. While credit counselling isn’t a grant or a loan to pay off your debt, it can introduce you to lifelong, healthy financial habits that can make a difference to how to manage your finances.
Consolidating your debt
In simple terms, debt consolidation involves taking out a new, larger loan to pay off a number of smaller loans or debts that you’re struggling to repay. By doing so, you will combine several individual debts into one, with one monthly payment.
The aim of a debt consolidation loan is to reduce the amount of interest you’re paying on several debts. It won’t reduce the total amount of debt you need to repay. With this in mind, it may be worthwhile discussing this option with an LIT who can advise you on whether this is the best way forward for you.
Filing for Personal Bankruptcy
Filing for Bankruptcy is often seen as a last resort when it comes to debt relief, but if your debt feels unmanageable and you’re struggling to see a way out, it may offer you the fresh start you are looking for.
While it’s not a free Canadian government grant, Bankruptcy is governed by the Bankruptcy and Insolvency Act and is a legal form of debt relief. The only way to file for Bankruptcy in Canada is through an LIT, formerly known as a Bankruptcy Trustee. LITs are trained and licensed by the Canadian government to provide expert Bankruptcy services and advice, so you are supported through the process.
Similar to a Consumer Proposal, Bankruptcy offers you an immediate stay of proceedings, meaning your creditors can no longer contact you for debt repayments. There is a presumption that you will lose everything you own when you file for Bankruptcy, but this isn’t the case. There are assets you can keep which you can review with your LIT.
Filing for Bankruptcy is a serious decision to make, which comes with both advantages and disadvantages. Before you file for Bankruptcy, it’s important that you speak to a professional, like an LIT, who can discuss all your options with you so you know you’re making the right choice for your financial future.
Ready to take control of your debt?
Although we’ve pointed out that there aren’t any wonderful Canadian government grants to help you pay off your debt, there are several debt relief options that can help you get your finances back on track. It’s never too late to reach out for support. The first step to take to improve your financial situation is speaking with a Licensed Insolvency Trustee. Our LITs are experts in all areas of debt support, from Bankruptcy to credit counselling.
Contact us today at Allan Marshall & Associates, for a free consultation and begin your journey towards a brighter future.