Debt Help in Canada: 2025 Guide to Getting the Right Support

Short Answer: What Is Debt Help in Canada?

Debt help in Canada is any trustworthy support that helps you understand your finances, deal with creditors, and use legal or voluntary programs to get out of debt. This can include budgeting advice, non-profit credit counselling, debt consolidation loans, Debt Management Plans, consumer proposals, or bankruptcy.

The Financial Consumer Agency of Canada (FCAC) provides education and tools for Canadians who need help with debt, while formal insolvency solutions are overseen by the Office of the Superintendent of Bankruptcy (OSB) and administered by Licensed Insolvency Trustees.

Quick Facts: Debt Help in Canada

What Does Debt Help Mean in Canada?

Debt help is more than just a quick fix. It includes information, professional advice, and, when necessary, legal processes that can protect you from creditors and give you a fresh start.

Depending on how serious your situation is, debt help in Canada might look like:

• Learning to budget and negotiate lower interest rates on your own.
• Working with a non-profit credit counsellor to create a plan.
• Using a debt consolidation loan or line of credit to simplify payments.
• Filing a consumer proposal or bankruptcy with a Licensed Insolvency Trustee if your debt is unmanageable.

Types of Debt Help Options in Canada

Here is a clear overview of the most common forms of debt help that Canadians use, from least to most formal.

1. Self-Help and Budgeting Support

For early-stage debt problems, you may only need stronger budgeting and a clear plan.

• Create or update a household budget.
• Track spending and cut non-essential expenses.
• Contact creditors to ask for lower interest rates or temporary relief.

The FCAC provides free tools and tips on budgeting, money management, and warning signs of debt trouble: Debt & borrowing — Canada.ca.

2. Non-Profit Credit Counselling and Debt Management Plans (DMPs)

A non-profit credit counselling agency can provide personalized advice and may offer a Debt Management Plan (DMP).

With a DMP:

• You make one monthly payment to the agency.
• The agency pays your creditors.
• Creditors often reduce or eliminate interest, making it easier to pay off debt in 3–5 years.

The FCAC also provides guidance on choosing a credit counsellor.

3. Debt Consolidation Loans and Lines of Credit

A debt consolidation loan or line of credit combines several debts into one new payment, ideally at a lower interest rate.

Read our in-depth guide: Debt Consolidation in Canada.

Pros:

• One monthly payment instead of many.
• Potentially lower interest than credit cards.
• Clear payoff date if you follow the plan.

Cons:

• Generally requires fair-to-good credit to qualify.
• Does not reduce the total debt; only restructures it.
• May cost more long-term if you extend the repayment period.

4. Consumer Proposals

A consumer proposal is a formal debt help option created under Canada’s Bankruptcy and Insolvency Act. It allows you to repay only a portion of what you owe over a period of up to five years, with no interest.

Key features:

• Administered only by a Licensed Insolvency Trustee (LIT).
• Includes most unsecured debt: credit cards, lines of credit, payday loans, tax debt, and more.
• Stops collection calls, wage garnishments, and lawsuits.
• Lets you keep your assets as long as you maintain your payments.

To learn more, visit our comprehensive guide: Consumer Proposal in Canada.

5. Personal Bankruptcy

Bankruptcy is usually considered when your debt is very high, your income is limited, and other debt help solutions will not work. Bankruptcy wipes out most unsecured debts and gives you a legal fresh start after you complete your duties.

Highlights:

• Administered by a Licensed Insolvency Trustee and overseen by the OSB.
• Most unsecured debts are eliminated at discharge.
• Certain assets are protected by provincial exemptions; others may need to be surrendered or bought back.
• Has a stronger impact on your credit rating but is often the quickest way to reset your finances.

For full details, see: What Is Bankruptcy in Canada?

Which Debt Help Option Is Best for Me?

There is no single “best” debt help solution. The right path depends on your income, assets, family situation, and how severe your debt problem is.

Questions to Ask Yourself

• Can I repay what I owe in full if the interest is reduced?
• Am I falling behind on payments, or just barely keeping up?
• Am I using payday loans or new credit to pay old debts?
• Do I need legal protection from collection actions or garnishments?
• Do I want to protect assets like my home or investments?

If you can pay down your debt with lower interest and a realistic budget, solutions like debt consolidation or a Debt Management Plan might work. If your debt is unmanageable, a consumer proposal or bankruptcy may be more effective forms of debt help.

Where Can I Get Debt Help in Canada?

1. Government Resources

The Government of Canada offers unbiased information on debt and borrowing through the FCAC:

• FCAC — Dealing with debt
• FCAC Financial Goal Calculator

2. Non-Profit Credit Counselling Agencies

Non-profit credit counsellors provide free or low-cost budgeting help and DMPs. 

3. Licensed Insolvency Trustees

Licensed Insolvency Trustees are the only professionals in Canada legally authorized to file consumer proposals and bankruptcies. They are regulated by the OSB and must explain all of your options, not just bankruptcy.

Verify an LIT through the OSB: Office of the Superintendent of Bankruptcy — Find a Licensed Insolvency Trustee.

You can also use our Find a Local Trustee tool to connect with a debt help professional in your province.

How to Avoid Debt Help Scams in Canada

Unfortunately, some companies advertise “government debt relief programs” or “instant credit repair” that are misleading or outright fraudulent. They often charge large upfront fees and then refer people to the same debt help options they could have accessed directly.

The Government of Canada has issued warnings about these practices, including the article “Struggling with debt? Beware of debt-relief scams”.

Red Flags

• High upfront fees before any real work is done.
• Guarantees to “erase your debt” or “fix your credit overnight.”
• Pressure to sign quickly and avoid talking to your bank or other trusted professionals.
• Claims they can file a consumer proposal or bankruptcy — even though they are not Licensed Insolvency Trustees.
• Advice to stop paying your creditors without a clear written plan from a regulated professional.

If something feels off, double-check with:

• The OSB — Licensed Insolvency Trustee directory.
• The Financial Consumer Agency of Canada for guidance and complaint options.

Frequently Asked Questions About Debt Help in Canada

Does Canada have government debt help programs?

Canada does not have a single program where the government pays off your debts. Instead, the federal government regulates formal debt solutions like consumer proposals and bankruptcies through the Bankruptcy and Insolvency Act and the Office of the Superintendent of Bankruptcy.

Is non-profit credit counselling better than bankruptcy?

Non-profit credit counselling can be a good form of debt help if you can afford to repay 100% of what you owe with reduced interest. If you cannot, a consumer proposal or bankruptcy may provide the deeper relief you need. A Licensed Insolvency Trustee can help you compare all options.

Will getting debt help ruin my credit?

Some forms of debt help, such as consolidation loans and budgeting support, have minimal credit impact. Others, like Debt Management Plans, consumer proposals, and bankruptcies, do affect your credit rating, but they are also often the first step toward rebuilding your finances and improving your credit over time.

Can I get debt help for tax debt and CRA collections?

Yes. Consumer proposals and bankruptcies can include income tax debt, GST/HST balances, and some other CRA debts. A Licensed Insolvency Trustee can explain how these options work with CRA collections.

How do I know if I need professional debt help?

You should consider talking to a professional if you are regularly missing payments, using one form of credit to pay another, receiving collection calls, or feeling overwhelmed by your debt. A confidential consultation with a Licensed Insolvency Trustee or non-profit credit counsellor is usually free.