Canada Debt, Debt Relief in Canada and Debt Forgiveness

According to forecasts by the PBO, Canada debt could hit $1 trillion this fiscal year due to the current economic shutdown caused by the COVID-19 pandemic and residents are looking for debt relief in Canada and debt forgiveness options. Canada’s debt to GDP ratio could keep rising as well if current programs to fight COVID-19 are extended or become permanent. While we’re racking up debt at the federal level, however, debt loads of Canadian consumers went down for the first time in a decade.

It seems that the COVID-19 pandemic that led to widespread shutdown of stores and restaurants have prompted many Canadians to cut back on their spending and borrow less. However, this doesn’t mean Canadians no longer have any debt. On the other hand, the typical person still owes more than $23,000 in consumer debts, Equifax Canada says. Moreover, delinquency rates are growing in many places across the country including Ontario, B.C. and Alberta which means a lot of people are falling further and further behind on their bills. Equifax Canada projects that delinquencies and bankruptcies could rise later in the year.


At Richard Killen & Associates, we understand that people unavoidably get into financial troubles for many reasons – job loss, reduced income, medical expenses, or just coping with the rising costs of raising a family. When you are in over your head in debt it can be extremely stressful, particularly when you are uncertain about the future and fear that you will never be able to pay off your creditors. The unending spiral of high-interest rates, late fees if you fall behind on your payments can keep adding up and make it seem impossible to become debt-free.

When you are struggling to make minimum payments, starting to miss payments or have missed payments consecutively for months and are already getting calls from collectors, it’s time you get help. We at Richard Killen & Associates want you to understand there are debt relief options to help you get out from all your unsecured loans. In fact, you may have more options than you probably realize. We can help you look at several options to find the best way to get out of debt in Canada so you can regain financial stability in the quickest amount of time and for the least amount of money.

The 4 Things You Need To Know About Debt Relief and Insolvency In The GTA?


Debt relief programs in Canada are designed for those struggling with a large amount of unsecured debts, including those from credit cards, payday loans and other liabilities that are not secured by an asset or other collateral. It is specifically for those whose financial situation is such that it is no longer possible to create a budget to get out of debt or they may have been denied or do not qualify for a consolidation loan. These programs for debt relief do not merely help you manage your debt, but actually reduce the total amount you are required to repay.

Debt forgiveness or payment forgiveness is the basic principle on which debt relief programs operate. In debt forgiveness, there is a partial or total reduction in the total amount you owe. The premise is that if you have a lot of debt and are seeking assistance to repay them, you should not have to pay more to your creditors than what is absolutely required. In essence, therefore, creditors agree to eliminate part or all of your monies owed in exchange for a repayment plan.

Many Canadians do not know that creditors are often willing to consider an agreement with a debtor to reduce the outstanding amounts for less than the principal amount owed. When negotiations are successful, most unsecured creditors will in fact settle for around 30 to 50% of the overall amount due.

As licensed insolvency trustees, Richard Killen & Associates are authorized by the government to work with your creditors to get them to grant you a legal settlement agreement that is affordable to you and allows you to reduce a significant portion of your money owed to creditors.


The right debt relief solution can help you achieve the following:

  • Reduce a significant portion of your monies owed
  • Combine all your payments into one lower monthly payments
  • Get you out of debt within a set time period
  • Eliminate most of your unsecured debts

However, it can be hard to know which program will work best for your own unique financial situation. It is best to get professional help from a Licensed Insolvency Trustee or a LIT, particularly if you have stopped making payments and are getting harassed by creditors. LITs are the only top debt experts in Canada who are licensed by the government to provide the safest and best debt relief solutions to eliminate debt. A trustee will provide a financial assessment and explain the short and long-term consequences of each option so you can make an informed decision.

Let’s take a look at the top debt relief options in Canada

Debt Management Plan (DMP)

A DMP is a program offered by credit counselling agencies. A licensed credit counsellor offers a plan to your creditors to pay back your debts over a period of three to five years. It can eliminate consumer debt like monies owed on credit cards, bank loans and past-due bill payments, but it cannot get rid of student debt, tax debt or payday loans. Technically, a DMP is a repayment plan and not a debt forgiveness program because there is no debt cancellation or reduction involved. You will still have to repay the full principal amount you owe, although interest charges may be waived. In addition, a DMP is not a legal arrangement, only a voluntary agreement between your creditors. If one creditor does not wish to participate in the repayment plan, they can choose not to join. Most payday loan lenders opt not to join, which is why payday loans typically cannot be eliminated through a DMP.

Consumer Proposal

A consumer proposal is a form of debt forgiveness governed by the Bankruptcy & Insolvency Act. In this program, your total liabilities can be reduced so that you actually repay less than what you owe. A Licensed Insolvency Trustee administers the proposal and negotiates with your creditors how much your exact payment will be. Successful negotiations can lead to up to 80% reduction of the total amount owing. Consumer proposals are legally binding arrangements, which means when creditors vote to accept the proposal they are bound to the terms of the agreement until the end of the agreement. Moreover, most unsecured debts can be eliminated in a consumer proposal including payday loans, CRA tax debts and student loans that are more than 7 years.

Personal Bankruptcy

For some people, the best way to get out of debt in Canada is by filing for bankruptcy. It can be an option of last resort for those who do not qualify for a consumer proposal and cannot afford to repay even a portion of their debt. Personal bankruptcy in Canada is a formal and legal debt forgiveness program in which creditors forgive or write-off your unsecured debts, and in exchange, you surrender non-exempt assets and make monthly payments based on your income. Once you obtain bankruptcy discharge, all unsecured debts included in a personal bankruptcy are forgiven, you are free from the obligation to pay all those debts, and you obtain a fresh start.

Get Debt Relief Help Today

Most Canadians are responsible enough when it comes to managing and paying off their monthly obligations. However, the massive impact of COVID-19 and a slowing economy are putting more pressure on the ability of many people to pay down outstanding amounts. If current COVID-19 circumstances are causing financial hardship and you are having trouble keeping up with your payments, know that you have many options to get out of debt in Canada.

We remain committed to providing you with the best advice and guidance about your finances and money worries in these challenging times. Contact Richard Killen & Associates today and talk to a local Licensed Insolvency Trustee to explore your options for debt forgiveness and debt relief in Canada.

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    Since 1992, Richard Killen & Associates, a Licensed Insolvency Trustee, have helped thousands of people resolve their financial problems. With 25 years experience in this industry, our president, Richard Killen, and the rest of our team understand the difficulties that honest people can sometimes find themselves in. This expertise makes it possible to provide you with a service that effectively deals with the issues.

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    "Serving the GTA for 25 years."