Dealing with consumer debt can loom over you and cause anxiety and frustrations when trying to pay it back. The impact of trying to keep up with monthly payments can seem like a never-ending dark hole, especially if debt collectors are calling due to missed payments.

Managing your debt responsibly is useful for avoiding being consumed by it, but that is easier said than done. Missing payments can result with more interest, fees, and charges to pay, along with a negative impact on your credit score.

Getting your debt forgiven in Canada can be done with the help of credit professionals, which vary depending on which province or territory you live in. Debt forgiveness programs can assist those who cannot escape the weight of their debt.

While there is no easy way to clear debt, it can be done with patience, dedication, and a bit of help.

How Can I Get Debt Forgiveness in Canada?

Tackling your debt can seem daunting, but there are a few steps you can take to start.

Make a Budget Plan

Make a clear budget plan that includes debt repayment. Using a budget tracker app or a spreadsheet to track spending details can keep you accountable for managing every dollar and see where adjustments can be made.

 Debt Consolidation

Consider consolidating debt so that you have lower monthly payments. Being approved for debt consolidation can make managing your debt easier, but be sure to stay on top of repayments, otherwise you may end up owing more.

Find Out Your Options

Call your creditors to discuss options that can benefit you. Lowering your interest rate on your credit card debt can reduce monthly minimum payments, but only if you qualify for approval.

If your monthly minimum payments are reduced, your future self will have a better chance of paying off your debt in full. It may still take years to pay off the debt, but at least the minimum payments will be easier to manage.

If you are still struggling to pay off your debt, even after implementing these steps, it may be time for more serious assistance.

What Help Can I Get to Reduce My Debt?

Seeking financial aid from a debt management advisor can provide you with some debt relief. These professionals can help you understand how to manage your money better, teach you best practices for budgeting money, and can help you find resources to take control of your debt.

Debt Management Programs

Using a debt management program can be useful if you are unsure of ways to reduce your debt. A debt manager will reach out to your creditors to negotiate a reduced interest rate and total debt cost. They can also consolidate your debt to make it easier to pay off.

While a debt management program can reduce monthly payments, it is important to be aware that in some cases, they may negatively impact your credit score.

Debt Settlement

Opting for a debt settlement allows a debt professional, such as a licenced insolvency trustee, will work with your creditors to find the best solution for you to be debt free. Usually, a lump sum payment will be negotiated, and the rest will be forgiven debt, and will reduce how much you pay back overall.

While this may seem like a wise choice, it is not a viable option if you are unable to access a large amount of money to pay off the negotiated sum at once. There is also the cost of the debt settlement to pay, which is often directly taken out of what you owe or the amount that was forgiven. Another downside to being approved for a debt settlement is that it will leave a negative score on your credit report.

Consumer Proposal

A consumer proposal can be created to help borrowers get control over their debt. Filing a consumer proposal will allow a licenced insolvency trustee to advocate and fight lenders and legal teams on your behalf in order to reduce your debt.

Once these battles are won, you will be safe from further legal prosecution, interest on the debt will freeze, and you will be free from collection agencies constantly contacting you. While this debt will no longer impact your daily life, it will leave your credit score with a substantial negative dent.

Declaring Bankruptcy

As a final option, you can choose to file for bankruptcy. While there are many downsides to declaring bankruptcy, most notably the severe impact it will have on your credit score, this choice can have upsides that can give you the most debt relief. Even though you will lose certain assets by declaring bankruptcy, this is where debt forgiveness rules supreme, and gives you a fresh start.

Why Are Credit Scores So Important?

Your credit score will determine if you are eligible for loans, mortgages, insurance, apartment rentals, and even cell phone plans. Having a mediocre credit score proves that you may not have the best financial history, making you a risky candidate for lenders and landlords.

While a low credit score is less than ideal, it is not a permanent situation. Opting for debt forgiveness in Canada will lower your credit score, and it will take time and effort to get to get it to a good place, but it may still be the best solution for you.

Which Debts Cannot Be Forgiven?

Once you have chosen how you will best get your debts forgiven in Canada, the next step is to understand exactly which debts will be forgiven. For the most part, the following debts can be forgiven:

  • Overdue bills
  • Unsecured loans and lines of credit
  • Credit card debt
  • Income tax debt (CRA)
  • Payday loans

Knowing the debt forgiveness rules and coverage that your program offers can prevent unwanted surprises. Most debt forgiveness programs do not cover:

Secured loans: Since these lenders offer loans against your assets, you may have to sell your property or car to repay the loan. Otherwise, your assets could be repossessed or foreclosed upon.

Student loans: Most student loans are not covered by debt forgiveness plans, especially if repayment started within the last seven years. If it has been over five years since you have been a student, you may qualify for the hardship provision if it is legally decided that you have acted in good faith to repay the loan, and if your experience with financial difficulty will continue to impact ongoing repayments.

Child support and alimony payments: No matter what money troubles you have, any outstanding child support and/or alimony payments will still need to be covered.

Time to Get Started

Now that you have the answers to the questions “what is debt forgiveness?” and “what are my options for debt forgiveness in Canada?”, you can make an educated choice about how to get control over your debt. As soon as your debt has been forgiven, it is time to get serious about rebuilding your credit and creating a budget that avoids falling you back into debt. Carefully considering how and where you are spending your money, what your financial goals are and what steps are needed to get there can keep you on track to accomplishing them. Achieving small goals can help you develop a better relationship with money.

Lend For All     1 King St W Suite 4800 -24 Toronto, ON M5H 1A1   |  +1 800-532-4505

Disclaimer: Lendforall Canada/ is not a lender, does not make offers for loans, and does not broker online loans to lenders. Submission of a loan request to this website does not guarantee an offer or an approval for a loan. Lendforall Canada is not responsible for third party products, services, sites, recommendations, endorsements, reviews, etc. All products, logos, and company names are trademarks™ or registered® trademarks of their respective holders. Their use does not signify or suggest the endorsement, affiliation, or sponsorship, of or by Lendforall Canada or them of us. This content is provided by Lendforall Canada and is free of charge with no obligation to continue with the third party. is an independent, advertising-supported service. The owner of this website may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. Lendforall Canada strives to provide a wide array of offers for our users, but our offers do not represent all financial services companies or products. We endeavor to ensure that the information on this site is current and accurate but you should confirm any information with the product or service provider and read the information they can provide.