Understanding Orderly Payment of Debts

Understanding Orderly Payment of Debts: A Comprehensive Guide

When you’re struggling with unmanageable debt, it’s vital to explore all available options. One unique solution available to some Canadian residents is the Orderly Payment of Debts (OPD) scheme. But what is Orderly Payment of Debts? This article delves deep into this financial arrangement, its benefits, eligibility criteria, and how it compares with other debt relief options in Canada.

An Overview of Orderly Payment of Debts

Orderly Payment of Debts (OPD), often referred to as a “consolidation order,” is a court-ordered debt repayment program in Canada. It offers an alternative to bankruptcy for individuals struggling with unsecured debts.

NOTE: The OPD program is currently available only in Alberta, Saskatchewan, Prince Edward Island, and Nova Scotia. Quebec residents have an equivalent process called Voluntary Deposit Law.

The Mechanics of Orderly Payment of Debts

When you apply for an OPD, a provincial body files the application on your behalf. Upon approval, the court consolidates all your unsecured debts into one payment. It then determines a monthly payment amount based on your affordability, which goes directly towards repaying your creditors.

You’ll pay the total amount of your unsecured debt, plus an annual interest rate of 5%. This arrangement typically lasts for three years.

Eligibility for Orderly Payment of Debts

To qualify for an OPD, you must meet the following criteria:


  • Reside in a province that issues consolidation orders;
  • Be able to repay your debts within three years;
  • Have not faced any legal proceedings from creditors.


If you’re ineligible for an OPD, you should consult a Licensed Insolvency Trustee for other debt management options.

Advantages of Orderly Payment of Debts

An OPD offers multiple benefits:


Creditors Contacted on Your Behalf:
The provincial body handling your OPD application contacts your creditors for you.

Consolidation of Debts:
Most of your unsecured debts are combined into one payment, simplifying debt management.

Affordable Monthly Payments:
The court determines a payment amount based on your ability to pay.

Interest Rate Reduction:
The interest rate on your consolidated debt is reduced to 5% per annum.

Legal Protection:
The OPD order is legally binding on your creditors, protecting you from legal actions like wage garnishments.

Asset Retention:
You can keep your assets, such as your home and car.

Counselling Support:
You receive guidance from a counsellor to help manage your finances better.

Drawbacks of Orderly Payment of Debts

While an OPD offers many benefits, it also has some drawbacks:


  • It doesn’t stop creditors who’ve already initiated legal proceedings from seizing your assets.
  • It can negatively impact your credit rating.


Orderly Payment of Debts vs. Consumer Proposal

While an OPD is a viable debt solution, it’s not the only one. A consumer proposal is another alternative to bankruptcy. It offers several advantages over an OPD, such as including tax debts and potentially reducing the principal amount owed. However, a consumer proposal often lasts longer than an OPD, potentially affecting your credit score for a more extended period.

Understanding Voluntary Deposit Law in Quebec

For residents of Quebec, an equivalent to the OPD is the Voluntary Deposit Law. This law allows debtors to make regular, income-based payments to the Court, which distributes these funds to creditors. While it offers some protection against wage garnishments and asset seizures, it’s not always the preferred debt solution for Quebec residents.

Making the Right Decision: OPD, Consumer Proposal, or Bankruptcy?

The right debt solution depends on your financial situation and how far along the road of insolvency you are. An Insolvency Trustee can review your circumstances and guide you towards the most appropriate solution, whether that’s an OPD, a consumer proposal, or bankruptcy.

Seeking Professional Advice

Navigating the complexities of debt management can be challenging. That’s why it’s crucial to consult a Licensed Insolvency Trustee. They can provide a free, confidential consultation to help you understand the various options available and guide you towards a debt-free future.


Knowing what is Orderly Payment of Debts can be your first step towards financial recovery. However, it’s essential to understand all your options and seek professional advice before making a decision. Remember, the road to financial freedom begins with taking the first step in the right direction.

Disclaimer: This article is intended for informational purposes only and should not be considered financial or legal advice. Always consult with a licensed professional for personalized advice.

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