Understanding which debt solution you qualify for

More Canadians are feeling the strain of debt today, as rising living costs and higher borrowing pressures outpace the ability of Canadians to cover living expenses with their existing incomes. 

According to the recently released TransUnion’s Q3 2025 Canadian Credit Industry Insights Report, total consumer debt hit a new high — CA$2.6 trillion. That’s a 4.1% year-over-year increase, reflecting growth across both mortgages and non-mortgage credit. Non-mortgage balances like credit cards and personal loans reached about CA$673 billion and the average non-mortgage balance per credit-active Canadian rose to CA$27,100 (up ~2.6% YoY.) 

This means that with total consumer debt rising, and unsecured debt per person increasing, many households may be carrying substantial financial burdens — especially under persistent cost-of-living pressures. This suggests a growing population of households that could struggle to balance debt servicing with everyday living costs. 

Recent data this year from Statistics Canada also shows that household debt is growing faster than income in 2025. Coupled with rising unemployment and higher living costs, it is no wonder life is tough for a lot of people right now. 

That pressure is leading more Canadians to look for options that give them a simpler way to manage their debt.  

For some, it’s trying to maintain a lifestyle that once felt comfortable but now requires more borrowing than before. For others, it shows up in family budgets that no longer stretch the way they used to. And for people who’ve spent years building financial stability, the focus is increasingly shifting to rising carrying costs and protecting what they’ve built. 

The bottom line — debt is taking up more room in people’s financial plans, and more Canadians are exploring their options for financial support and debt recovery. 

The good news is, if you, like many Canadians are feeling the stress of managing debt, there are solutions – like consumer proposals and bankruptcy – that can support your financial recovery. Both options are federally regulated and administered by Licensed Insolvency Trustees – like us.  

Understanding how each solution fits your financial reality helps you choose a path that feels personal and manageable. 

What is a consumer proposal, and when should you choose it? 

A consumer proposal is a legal agreement that lets you repay part of the unsecured debt you owe through one monthly payment. Many people who become insolvent explore this option when they don’t have enough income to pay their obligations, or their debt is greater than their assets. 

Here are some of the benefits of choosing a consumer proposal: 

• Debt interest charges are frozen immediately. 
• Protects you from creditors, wage garnishments, lawsuits, and stops calls from collection agencies. 
• Allows you to repay just a portion of your debt. 
• Makes it simple to repay your debts with one easy-to-make monthly payment over three to five years. 
• You get to keep all your assets including your car and home. 
• There are no additional costs or fees beyond your regular monthly proposal payments. 

A consumer proposal turns your debt into a predictable plan that you can realistically manage. It gives you space to focus on your priorities while making progress through a regulated framework. 

When should you consider bankruptcy? 

Bankruptcy is a legal process that provides you with a fresh financial start by eliminating most or all your debts (unsecured and secured). Bankruptcy typically lasts nine months, allowing you to become debt-free. 

It makes sense to consider bankruptcy when your financial strain goes beyond tightening budgets or restructuring or consolidating payments. Bankruptcy is a strong option when your financial pressure has become impossible to manage on any timeline and when you’re looking for a reset that provides immediate protection and a clear way forward. 

You qualify for bankruptcy if: 

• You owe at least $1,000 in unsecured debt. 
• You are insolvent under Canadian law, meaning you can’t pay your debts when they are due, or your debts exceed the value of your assets. 
• You have a connection to Canada (e.g. you live here, own property, or run a business in Canada). 
• You have been discharged from a previous bankruptcy. 

Deciding what fits your situation 

To figure out what your options are, you need to speak with a Licensed Insolvency Trustee. During this consultation, the Trustee will review your full financial picture and explain how each option works and how each solution impacts your assets, payments, and long-term financial recovery. 

If you’re unsure where you stand or which option fits, a free, no obligation, confidential consultation with a Licensed Insolvency Trustee can help you understand your choices clearly and decide your next steps.