Debt Settlement Ontario

How to Settle Debt in Ontario

Debt settlement in Ontario is a complex landscape with various players and programs, each offering unique solutions to help individuals tackle their debt issues. This article provides an in-depth exploration of the intricacies surrounding debt settlement in Ontario and the broad spectrum of options available to individuals grappling with debt.

An Overview of Debt Settlement Services in Ontario

In Ontario, there are primarily three kinds of debt settlement services:

  1. Consumer Proposals: These are legal agreements facilitated by a Licensed Insolvency Trustee (LIT) that allow debtors to settle their debts for less than they owe.
  2. Debt Management Programs: Offered by credit counsellors, these programs do not directly settle your debts, but offer possibilities for interest relief and a repayment plan.
  3. Debt Settlement Companies and Debt Consultants: These entities may propose an informal debt settlement agreement with individual creditors or direct you to a Licensed Insolvency Trustee for a fee.


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The Benefits of a Consumer Proposal

A consumer proposal, being the only legal and secure method to tackle your debts for less than what you owe, has several advantages:

  • It provides an immediate stay of proceedings, halting creditor actions, such as collection calls, court actions, and wage garnishments.
  • It covers all your unsecured creditors. Once the proposal is accepted, no creditor can opt out.
  • No payments or fees are required until your settlement proposal is filed with the government and you get complete creditor protection.
  • Consumer proposals have a high success rate, with a majority of settlements negotiated with creditors being approved.

The Risks of For-Profit Debt Settlement Companies

While debt settlement companies may seem like a convenient option, one must be aware of the potential risks:

  • These companies often charge substantial referral fees to direct you to a Licensed Insolvency Trustee.
  • According to the Canadian Bankers Association, less than 10% of informal debt settlement programs are successful.
  • These companies may use misleading terms to refer to a consumer proposal, often charging an unnecessary fee.
  • There are instances where the savings from a negotiated settlement are not as significant as the upfront fees charged by the debt consultant.

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Non-Profit Credit Counselling Agencies and Debt Management Programs

Legitimate credit counselling agencies can help you negotiate a repayment plan of 100% of your outstanding debts through a debt management plan. However, they do not offer a debt settlement as they cannot settle your debts for less than you owe.

Impact on Your Credit Score

Both debt management programs and consumer proposals will appear as a debt arrangement on your credit report and will stay on your report for a maximum of 6 years from the date of filing or default.

When Should You Consider Bankruptcy?

If you cannot afford to repay your debts as they come due, you may also consider bankruptcy as an alternative to a debt settlement.

Popularity of Consumer Proposals

Consumer proposals are becoming increasingly popular as a means to avoid bankruptcy. They provide creditor protection while consolidating all your debts into one affordable payment, often settling the debts for less than you owe.

Debt Settlement Services Locations

Debt settlement services are offered in various locations in Ontario, including Barrie, Belleville, Brampton, Brantford, Burlington, Cambridge, Guelph, Hamilton, Kitchener, London, Markham, Mississauga, and more.

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Phone and Video-Conferencing Services

For added convenience, some debt settlement services offer phone and video-conferencing services.

New Rules for Debt Settlement in Ontario

There have been new rules implemented in Ontario to protect consumers from unscrupulous debt settlement practices.

Debt Settlement vs Consumer Proposal

While both options aim to provide debt relief, they operate differently and have unique advantages and drawbacks.

In conclusion, debt settlement in Ontario offers a variety of options to help individuals manage and overcome their debt problems. Understanding these options and the associated benefits and risks can help individuals make informed decisions about their financial future.

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During our initial meeting, they took the time to understand my debt and financial circumstances. They explained the various options available to me and helped create a personalized plan that would be most beneficial for my situation. With their assistance, I was able to avoid declaring bankruptcy by presenting a consumer proposal to my creditors. Fortunately, my proposal was accepted, and I am extremely relieved to finally be free of debt, all thanks to BankruptcyCanada. The burden on my shoulders feels significantly lighter now, and I truly believe that Bankruptcy Canada has the most skilled specialists in debt relief.