Debt relief in Canada: compare your options

A useful first note is one sentence: “I can pay, but the interest is high,” “I cannot cover the minimums,” or “I have received a legal notice.” Those are different conversations. Write down the payments due before your next income arrives and which essentials they compete with. You can start our form without uploading those notes or knowing your exact credit score.

A repayment plan organizes existing debts rather than replacing them. FCAC describes contacting creditors to discuss possibilities such as different payment terms. A creditor must agree to a change; an informal conversation is not debt cancellation. If your budget has room for payments, ask what can change and get the proposed terms in writing.

A consolidation product pays off selected balances using new credit. The benefit depends on the rate, fees and repayment period. A smaller monthly payment is not proof of savings: extending the term can increase the amount repaid. Ask for the total cost, not just the payment advertised.

Credit counselling can help you review a budget and may lead to a debt management plan. A plan generally aims to repay the principal owed to participating creditors, sometimes with interest relief. It is different from borrowing and from a consumer proposal. Confirm what is included, who accepts the plan, and what the service costs.

A Licensed Insolvency Trustee administers these formal processes. They need an assessment of your actual finances, not just a debt balance entered online. A consumer proposal offers repayment terms to creditors; bankruptcy has different duties and possible asset consequences. Ask for a comparison that includes debts left outside either process, your home or vehicle, and the effect on a co-borrower.

Do not treat every balance as interchangeable. Tell the professional whether a debt is a government student loan, a tax balance, a secured loan or a joint obligation. For student debt, repayment assistance and occupation-based forgiveness have specific rules. The word “relief” in an advertisement does not establish government affiliation or your eligibility.