Financial Problems? We Can Help ™
283 User Reviews
Call us today 1-888-371-8900

Which Canadian Debt Relief Program Can Help Me Eliminate My Debt?

Are you dealing with financial hardship and struggling to pay your bills every month? It doesn’t have to be this way. There are various Canadian debt relief programs that can help you get rid of your debt. 

But with so many options out there, how do you know which one is right for you? 

In this post, we take a look at some of the most popular ways that Canadians obtain debt forgiveness. 

Credit Counselling

Non-profit credit counsellors help debtors summarize their debts and offer debt management plans (DMPs). 

A DMP allows you to repay the entirety of what you owe over a period of 3 to 5 years, typically at a reduced interest rate. If accepted by your creditors, you make your monthly payment to the credit counselling agency.

What you need to know:

  • You should confirm whether your counsellor is a member of a recognized Canadian credit counselling association.
  • There have been instances of dishonest counsellors taking money from debtors only to refer them to a Licensed Insolvency Trustee (LIT). 
  • Only an LIT can help debtors file Bankruptcies or Consumer Proposals. You never need a referral to consult a Licensed Insolvency Trustee. 

Debt Settlement

Debt settlement companies negotiate with each of your creditors to resolve your debts for less than what you owe. They do this by offering each creditor a lump sum of money. 

Payment is made directly to the debt settlement company. If settlement is accepted by your creditor, the debt settlement company in turn pays your creditor. 

What you need to know:

  • You’ll need access to a large sum of money to make the offer attractive to creditors.
  • Since you aren’t making payments to your creditors directly, while negotiations are conducted, your credit score will be impacted.
  • Creditors are not required to negotiate with a debt settlement company. 
  • Creditors are not required to accept settlement.
  • You may have to pay upfront or monthly fees to the debt settlement company, even if the settlement is refused by your creditors.
  • Creditors may still pursue action against you to recover the debt you owe.

Debt Consolidation

A debt consolidation loan replaces all your debts with one single loan. 

Payment on this loan is typically spread out over a long term, making it more affordable for you. It will also be more manageable, since you only have one payment to make each month and it will be automated. 

What you need to know:

  • If you have a credit score of less than 650, it may be hard for you to be approved for a debt consolidation loan.
  • Be sure to include all your debts in the loan.
  • Debt consolidation doesn’t eliminate your debt.

Tax Debt Relief

The Canada Revenue Agency (CRA) has plenty of tools at its disposal to pursue action against debtors to recover the tax debt they owe. The CRA can freeze bank accounts, garnish wages, and even register a lien on your home. 

You run the risk of the CRA taking action against you until you repay 100% of your tax debt to them…

Unless you file either a Bankruptcy or Consumer Proposal.

What you need to know:

  • By filing a Bankruptcy or Consumer Proposal, the CRA will be immediately stopped from continuing collection efforts against you.
  • To file either a Bankruptcy or Consumer Proposal, you need the assistance of a Licensed Insolvency Trustee (LIT).
    A Consumer Proposal is the only tax relief option that the CRA will accept.  In a CP, you negotiate a deal to repay what you can afford and an offer is made through your LIT to CRA along with your other creditors.
  • An LIT can also help you eliminate some or all of your back taxes. 
  • In a Bankruptcy, the tax debt is treated as any other unsecured debt. It can be eliminated. 

Canadian Student Loan Forgiveness

There are two different government repayment programs for Canada Student Loans. Each offers different benefits, depending on the severity of your financial circumstances. Benefits include:

  • A reduction in your monthly payment amounts.
  • Interest relief.
  • Payment deferrals.
  • Loan forgiveness.

A comprehensive review of these programs is outside the scope of this article.

However, it is worth noting that…

Government guaranteed student debt may be eligible for discharge and forgiveness under the Bankruptcy and Insolvency Act when you file a Bankruptcy or Consumer Proposal.

What you need to know:

  • If you have been out of school for more than 7 years, your student loans are automatically included in a Bankruptcy or Consumer Proposal.
  • If you have been out of school for only 5 years, you can apply to the court to have your student debt discharged if you can show “undue financial hardship.” 
  • To show “undue financial hardship,” you need to demonstrate that you acted in “good faith” in using and repaying those debts, and that continuing to do so will cause you severe financial difficulty.
  • Even if you haven’t been out of school for 5 years, you can still benefit from a Bankruptcy or Consumer Proposal. They can help eliminate other unsecured debt, such as your credit card debt. This makes repayment on your student loans easier. 
  • Private student loans are treated as unsecured debt. This means they can be discharged in a Consumer Proposal or Bankruptcy, without limitations or waiting periods.

Government Debt Relief Programs

The only government-regulated debt relief solutions available to Canadians are Consumer Proposals and Bankruptcies. These options are available to Canadian debtors pursuant to the Bankruptcy and Insolvency Act

Consumer Proposals and Bankruptcies:

  • Are legal processes that put an automatic Stay of Proceeding into effect once filed. This means your creditors are stopped from enforcing action against you to recover the debt you owe.
  • Release you from debt.
  • Require the assistance of a Licensed Insolvency Trustee (LIT) to file.

Consumer Proposals

A Consumer Proposal is a legal debt settlement between you and your creditors to repay a portion of your debts over a period of up to 5 years. 

Once the Consumer Proposal is complete, your debts are forgiven and you can start to rebuild your credit score. 

What you need to know:

  • A Proposal is only approved if you get the majority dollar vote of your creditors.  
  • Once approved, all creditors are obligated to take the deal, even if they voted against settlement. A Consumer Proposal is not voluntary.


Bankruptcy is a legal process regulated by the federal government. Once it’s complete, all debts included therein are discharged. This means you’re no longer obligated to pay them back. 

In a Bankruptcy, you make a monthly payment for either 9 months or 21 months, depending on your income. 

What you need to know:

  • You will have various obligations to meet during the life of the Bankruptcy. For example, you will need to attend two credit counselling sessions and provide proof of your income & expenses on a monthly basis to your LIT.
  • You will lose your tax refund and other assets. Any windfalls of money are included and paid into the Bankruptcy.

Who Should I Contact for Debt Relief Help?

There are many unlicensed debt consultants across the nation that will say they can help you get rid of your debt. In many cases, depending on your debt load, all they do is refer you to an LIT to file for Bankruptcy. 

If you need debt relief, the first professional you should contact is a Licensed Insolvency Trustee. 

Licensed Insolvency Trustees:

  • Are able to assist you with every one of the above debt relief options. From simple budgeting assistance all the way to Bankruptcy, an LIT is your one-stop-shop for debt relief.
  • Are licensed and regulated by the Canadian government.
  • Have the financial education and credentials to properly advise you.
  • Undertake continuing education and are always up-to-date on the latest information.
  • Must adhere to ethical obligations, so you can be sure they have your financial interests at heart.

Allan Marshall and Associates Inc. Can Help You

The seasoned Licensed Insolvency Trustees at Allan Marshall and Associates Inc. have the tools and expertise to guide you through different debt solutions. 

At your free initial consultation, we will review your financial circumstances and advise you of all debt relief options available to you. At the end of the consultation, you’ll have the information you need to make an informed choice on how to proceed.

Are you ready to get a handle on your debt? Give us a call today to schedule your free consultation at 1 (888) 371-8900 or send us a message here.

Avatar photo

Allan Marshall & Associates Inc.

Allan Marshall & Associates Inc. is a Licensed Insolvency Trustee firm found in British Columbia, Alberta & the Maritimes. We are licensed by the Federal Government of Canada to administer Personal Bankruptcies, Consumer Proposals, other insolvency services such as Credit Counselling. We have the knowledge and experience to assess your situation and offer the best advice for your particular need, whether you are a first time bankrupt or simply struggling to make ends meet.
Our writing team consisting of LIT's and debt administrators that write informative blogs, articles and answer questions to help you understand your debt issues.