Compare Your Debt Relief Options

Because no two families have the exact same debt problems and financial situation, there is no one size fits all solution to debt relief. In Canada, there are a number of alternative debt solutions that can help you deal with your debt. Each have their own distinct advantages and disadvantages. Which you choose will depend upon how much and what type of debts you owe; how much you can afford to repay and whether you need legal protection from wage garnishments, debt collections or other creditor actions.

While we provide an overview of each debt alternative, and in additional pages under this heading a head to head comparison of different debt relief solutions, you should consider talking to a Consumer Proposal Administrator about your unique circumstances so that they can tailor a solution to your needs.

Consumer Proposals

A consumer proposal is a legal debt settlement alternative to filing bankruptcy in Canada. Filed through a federally licensed Administrator (who is also a Bankruptcy Trustee), you settle your debt for less than you owe. It is binding on all of your unsecured creditors as long as your proposal is accepted. It can include not only credit card debt but payday loans, tax debts and, in certain circumstances, student loan debts.

The main advantage of filing a consumer proposal is that you are able to keep assets like your home or car. Your monthly payments are significantly less than they were before, and often less than they would be in a bankruptcy.

Contact a Consumer Proposal Administrator

Debt Management Plan (Credit Counselling)

Credit counsellors offer an informal debt relief program called a Debt Management Plan. This is a plan to repay all of your debt over a period of time. You receive relief from interest and penalties as long as you complete all of the agreed upon payments.

While your payments will be less than they are today, they will be more than in a consumer proposal because you are paying back 100% of your debts. Debts included are up to you, but participation is voluntary on the part of your creditors as well. Both Canada Revenue Agency and payday loan companies do not participate in Debt Management Plans in Canada.

Debt Settlement Programs

There are agencies across Canada that offer to work with you to negotiate a debt settlement between you and your creditors to repay a portion of your debts. These are services provided for a fee, although the fee can be represented as making additional monthly payments.

Your creditors are not legally bound to participate and can opt out at any time. That means they can continue to pursue wage garnishment, collections or any other action against you.

Debt Consolidation or Refinancing

If you have reasonable access to credit, or have equity in your home or another asset, you may be able to take out a second loan or mortgage to pay off your debts. This can allow you to consolidate several debts into one simple monthly payment. You may be able to lower your overall interest costs by borrowing at a lower rate than your high interest credit card debt.

You can choose which debts to consolidate however you may be required to offer up collateral or be asked to provide a co-signor in order to qualify for a debt consolidation loan. While this option can save you interest costs, you have not eliminated your debt, just exchanged it for a lower cost alternative.


Personal bankruptcy is always an option of last resort. It is however a legal process filed through a federally licensed Trustee in Bankruptcy. You can eliminate your debt in exchange for surrendering non-exempt assets.

Before deciding which solution will work best for you, review your options carefully. If you are considering a consumer proposal or any debt relief solution, you should meet with a Consumer Proposal Administrator or Bankruptcy Trustee. They can help you compare your alternatives to eliminating your debt.

For more information, we have provided additional pros and cons for each option and how each compares to a Consumer Proposal in Canada:

If you need help with your debts and are looking for debt relief, contact us to discuss how a consumer proposal can help. All our Consumer Proposal Administrators offer a free no-obligation consultation. You can simply ask a question and if a consumer proposal sounds like it will work for you, book a free appointment with your local trustee.