Debt Write Off

Navigating the Complexities of Debt Write-off in Canada

Financial conundrums can lead individuals and corporations alike into a labyrinth of debt. In the Canadian context, an array of mechanisms exist to help navigate this labyrinth. In this article, we will explore the Debt Write-off landscape in Canada with a focus on the regulations, options, and considerations that surround it.

Understanding Debt Write-off

Debt write-off is a financial tool that enables an organization to declare certain debts as uncollectible. This usually happens after all reasonable effort to collect the debt has been exhausted. In Canada, the Debt Write-off Regulations, 1994 provide a clear framework for this process.

Key Changes in the Regulations

The 1994 regulations replaced the 1985 version, eliminating the $25,000 ceiling on departmental write-off authority, meaning departments now have the authority to write off all uncollectible debts, within certain restrictions. This significant change was designed to streamline the process and increase efficiency.

Emphasis on Uncollectibility

The revised regulations emphasize the uncollectibility of debts. They require departments to exhaust all possible avenues of collection and consider using set-offs before writing off a debt. Set-offs can include offsetting debts against similar payments, payments made by the same department, or payments made by another department.

Departments Accountability

Departments are still accountable for ensuring that all write-offs are in strict accordance with the new regulations. They are expected to make every reasonable effort to collect the debt and use write-off as a last resort for debts that are genuinely uncollectible.

Special Cases and Exceptions

While the regulations provide for write-offs resulting from arrangements under authorities like the Bankruptcy Act, they are not an authority to enter into, or agree to, a compromise settlement. In such cases, departments do not have to satisfy the “uncollectibility” criteria.

Employment-related Debts

Writing off employment-related debts, such as accountable advances and overpayments of salaries, wages, and employment-related allowances, still require Treasury Board approval.

Non-budgetary Items

The write-off of non-budgetary items on the Statement of Assets and Liabilities, principally loans, and investments, must be approved by Parliament as these write-offs result in an expenditure.

Debt Relief Programs in Canada

In addition to the write-off process, several debt relief programs are available in Canada. They can make it easier for you to repay your debts, or even allow you to write off a portion of your debts.

Consumer Proposal

A Consumer Proposal is a formal, legally-binding agreement between you and your creditors. It can reduce your overall debt, in many cases by as much as 75%.

Debt Management Plan (DMP)

A Debt Management Plan is not exactly a forgiveness program, but it provides debt relief by proposing a payment plan to creditors that allows for debt clearance via monthly payments.

Direct Consolidation Loan

A consolidation loan is a method of managing your debts by taking out a single overarching loan, repaid via a single monthly payment.

Debt Settlement

Debt Settlement is another option for those struggling to repay their debts. You agree with your lender to pay less than what you owe so that the balance is settled.


Bankruptcy can be an effective way for debtors to clear out their debt and get a fresh financial start. However, it can have long-term consequences on your credit score and future ability to borrow money.

In conclusion, while the landscape of Debt Write-off in Canada can seem daunting, it is navigable with the right knowledge and guidance. Understanding the regulations, being aware of your options, and carefully considering your circumstances can help you navigate the complexities of financial conundrums.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.