Debt relief options in Canada compared
How the formal and informal ways out of unmanageable debt work, who they suit and what to watch for.
This table compares types of debt solution, not companies. Which one fits depends on your income, the type and amount of debt, your assets and your province. Use it to shortlist, then confirm with a Licensed Insolvency Trustee or a non-profit credit counsellor. For the arithmetic, see the worked examples.
Select a column header to sort.
| Option | How it works | Good for | Watch out for |
|---|---|---|---|
| Negotiating directly with creditors | You ask each lender for a hardship arrangement, lower payment or reduced interest | Short-term problems with one or two creditors | No legal protection; arrangements may still be reported to credit bureaus |
| Debt consolidation loan | A new loan pays off several debts at a lower rate | Good credit and a stable income, where the rate truly falls | Only helps if the total cost falls and you stop borrowing again |
| Debt management plan (non-profit credit counselling) | Voluntary plan: you repay full principal through an agency, often with interest reduced or waived | Steady income that can repay principal within about 5 years | Creditors can refuse; no stay of lawsuits; noted on credit report until 2 years after completion |
| Orderly Payment of Debts (AB, NS, SK, PEI) | Court consolidation order under BIA Part X; one payment to an administrator | Residents of participating provinces with eligible debts | Repays debts in full; not every debt can be included; available only in some provinces |
| Voluntary deposit (Quebec) | You deposit the seizable part of your income at the Court of Québec, which distributes it to creditors | Quebec residents facing wage seizure | Debts are not reduced; you must deposit yourself, weekly or monthly |
| Consumer proposal (BIA Division II) | Binding offer through an LIT to repay part of your unsecured debt over up to 5 years | Debts up to $250,000 (excluding the home mortgage), regular income, assets you want to keep | Deemed annulled after three missed monthly payments; on credit report up to 3 years after completion |
| First bankruptcy | LIT administers your non-exempt assets; most debts released at discharge | Low income, few non-exempt assets, debts you cannot realistically repay | Surplus income payments if income is above the standard; discharge 9 or 21 months; non-exempt assets lost |
| Second or later bankruptcy | Same process with longer timelines | Rare cases where no proposal is workable | Discharge 24 or 36 months; credit record kept for 14 years |
The $250,000 consumer proposal limit and the discharge timelines come from the Bankruptcy and Insolvency Act (ss. 66.11 and 168.1), current to 30 September 2026. Proposed rule changes published in the Canada Gazette in November 2025 would raise the limit to $325,000, but only after they are finalized and then a further year; check the Office of the Superintendent of Bankruptcy. Credit report periods come from the Financial Consumer Agency of Canada. Provincial program availability can change; confirm with the program administrator.