Understanding real debt relief options in Canada

Understanding real debt relief option in Canada

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By Laurie Campbell | Date: 2021.09.21| Reading time: 4 minutes, 16sec | 856 words 

Every year, tens of thousands of Canadians find themselves suffering from overwhelming debt. There is a wide range of debt relief services available, which can make it just as hard to choose the right solution for you. Here is a breakdown of the options to help you make an informed choice.

Know what is right for you

There are many companies that will tell you they can help you with your debt.  Don’t be fooled by those that state they can help you with your debt but do not have the legislation to provide options through a Licensed Insolvency Trustee.   Ultimately you will be charged hefty fees and still not get the debt relief you need.

Credit Counselling Services

There are both for profit and not for profit credit counselling services available across Canada. While these companies will tell you that they are local and have your best interest at heart beware.

These companies will only offer full repayment of your debt and while some creditors will stop interest, some will not.  Unlike Licensed Insolvency Trustees, they are not legislated by the federal government to offer a repayment of a portion of your debt and cannot guarantee a creditor will stop interest or accept a program.  They also charge fees for their service.  These companies also claim that you will have a better credit rating by using their service rather than that of a consumer proposal but that is simply not true.

  • Pay 100% of debt back
  • Some creditors will stop interest, others will not (finance companies, CRA, some payday loans)
  • At the mercy of the creditor to accept programs
  • Up to 15% in debt management fee per month (example for a debt of $20,000, fees could be up to $3000)
  • A set up charge of up to $100
  • Approximately 4 years to repay the debt
  • Stays on your credit rating as a R7 for two years after you complete the program
  • May be able to keep some assets
  • No stay of proceedings (meaning creditors can still sue you if you are on a debt management program)
  • Budgeting and money management counselling and tools                                       

Legislated Consumer Proposal

An option licensed and regulated by the government of Canada.  Only Licensed Insolvency Trustees such as Bromwich+Smith can provide this option to consumers.

  • Pay back a portion of your debt
  • Stay of proceedings meaning creditors cannot sue you whilst in a consumer proposal
  • Fees of $1500 spread over the lifetime of the proposal
  • All creditors must stop interest
  • Proposal can last 5 years but you can pay it off sooner if your circumstances change and you will have a R7 rating for three years after you complete the proposal
  • Assets cannot outweigh the amount being proposed to the creditor except in the case of RSPs in which any contribution made a year prior and beyond the filing of a consumer proposal can be kept
  • Budgeting and money management counselling tools
  • Administered by a licensed insolvency trustee appointed by the government of Canada.

Full Value Proposals

At Bromwich+Smith we can offer you a full value proposal when your assets outweigh your debt.  In this case while you will need to pay back all of your debt, we can assure you that interest and penalties will be waived and that your payment will be lowered.  As a Licensed Insolvency Trustee, we will ensure that you are protected through government legislation available to you.

Debt Consultants

These companies are not Licensed Insolvency Trustees and will charge you a large amount of money only to refer you to a trustee in bankruptcy to complete a consumer proposal or bankruptcy.  Do not be fooled by lofty promises and low repayment plans. They are not legislated and in the end, you will pay hefty fees for your service only to be referred to a trustee in bankruptcy.

These companies advertise heavily on the internet stating they can reduce a consumer’s debt by up to 80%.   Their advertising is very alluring and debt consultants continue to gain market share in Canada.  

These consultants are not Licensed Insolvency Trustees and cannot file a legislated regulated consumer proposal for a consumer.  In essence they gather financial information such as assets, debts and income and then calculate a repayment to creditors. At this point they charge consumers hefty fees (as much as $5000) and then turn the file over to a trustee. A trustee will then review the file, and charge the regulated amount to administer the file. Consumers need to be aware that they can go straight to the trustee and not pay any fee to a debt consultant thereby saving themselves as much as $5000.


Now that you are armed with this knowledge, take action to get that debt behind you. Get that overwhelming and crushing debt off your back so you can thrive again.    

No matter how difficult or complicated your financial situation may seem, there are options available to help you rebuild and thrive. Our Debt Relief Specialists are available by phone at 1.855.884.9243, or you can request a call back via our contact us page. There is no need to travel to a local office. Licensed Insolvency Trustee, Bromwich+Smith, is now offering video appointments, with all services available from the comfort of your home.   




Laurie Campbell Laurie Campbell

Laurie Campbell, Director of Client Financial Wellness at Bromwich+Smith is recognized as a national expert on personal finance and as an advocate for consumer protection.  Industry, government, and the news media often seek her expertise. Ms. Campbell has been active as a leader over the years in many financial literacy initiatives. Among them is Credit Education Week Canada which also served as inspiration for Canada’s annual Financial Literacy Month, now recognized by the Government of Canada. Ms. Campbell was on the Federal Taskforce on Financial Literacy and further joined the Federal Steering committee on Financial Literacy.

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