Rising personal debt continues to put financial pressure on individuals and families in Ontario. Things like job loss, unforeseen expenses, and inflation can often make it difficult to stay financially afloat.
Fortunately, debt relief solutions are available to Ontario residents looking for assistance. Options like budgeting, credit counselling, and even consumer proposals or bankruptcy can help reduce or restructure what you owe.
Let’s explore all the options available in Ontario to help you move towards taking control of your finances and achieving stability.
Debt Relief Options In Ontario
The following debt relief options are available in Ontario. The option you choose depends on your particular situation and needs:
| Debt Consolidation Loan | A debt consolidation loan combines multiple loans or credit accounts into one loan with one monthly payment, often at a lower interest rate. It simplifies repayment, streamlines your financial obligations, and saves you money. |
| Debt Consolidation Program | A debt consolidation program is a structured repayment plan where a credit counsellor negotiates with your creditors on your behalf to combine multiple debts into a single monthly payment, typically with reduced or waived interest. Unlike a debt consolidation loan, this program doesn’t involve new borrowing, but rather helps make repayment more manageable. |
| Consumer Proposal | A consumer proposal is a legally binding agreement that allows individuals to settle their debts by offering creditors a reduced amount. If the creditors agree, the amount is repaid over a fixed period, typically up to 5 years. It helps avoid bankruptcy while protecting assets and stopping collection actions. |
| Bankruptcy | Bankruptcy is a legal process that allows individuals to eliminate most unsecured debts if they’re unable to repay them on their own. It provides immediate relief from collection actions while offering a structured path toward financial recovery. |
How Much Debt Do You Have In Comparison To Other Ontarians?
The average consumer debt in Ontario as roughly $22,597 as of Q4 2024, an increase of 3.51% from the same time the year prior. This figure reflects the growing financial strain caused by rising housing costs, inflation, and stagnant wages.
Comparing your own debt to this provincial average can help you understand where you stand financially and whether you may need assistance. If your debt is much higher than the average, it may be worth exploring debt relief options.
Where To Get Help?
If your debt is spiralling out of control and you’re unable to get a handle on it yourself, it may be time to seek outside help. You can speak with a credit counsellor to help you understand and manage your debt, improve budgeting habits, and explore repayment options tailored to your financial situation.
If you need a more aggressive debt solution, such as bankruptcy or a consumer proposal, you can get in touch with a licensed insolvency trustee (LITs). LITs are the only individuals legally permitted to file these proceedings under the Bankruptcy and Insolvency Act (BIA).
| Are Credit Counsellors Licensed In Ontario? No, credit counsellors aren’t licensed in Ontario, unlike LITs. That said, credit counsellors are regulated by provincial legislation and are required to be registered as collection agents to administer debt management programs. |
How To Find A Credit Counsellor Or Licensed Insolvency Trustee
Here are a few companies available that can help you deal with your debt in several ways, depending on the severity of your situation:
Credit counsellors are available all across Canada. Here are a few top-rated agencies to consider:
| Company | Services Offered | |
| 4 Pillars | Credit counselling Credit rebuilding Debt consolidation Consumer proposals Bankruptcy | Learn More |
| Credit Counselling Canada | Credit Counselling Financial Literacy Education Debt Repayment | Learn More |
| Consolidated Credit | Credit counselling Debt management Debt consolidation Consumer proposal Bankruptcy | Learn More |
| BDO Debt Solutions | Debt counselling Consumer proposals Bankruptcy | Learn More |
| Raymond Chabot | Debt consolidation Consumer proposals Bankruptcy | Learn More |
You can also use the following sources when searching for a credit counsellor:
- Credit Counselling Canada
- Canadian Association of Credit Counselling Services
- Ontario Association of Credit Counselling Services
Debt Consolidation Loans
A debt consolidation loan is a financial tool you may use to combine several debts such as unsecured personal loans, credit card balances, and other high-interest debts into a single loan. The idea behind debt consolidation loans is to simplify loan repayments by having only one monthly payment and save money with a lower interest rate compared to rates of all current debts.
Several types of loans can be used to consolidate your debt:
- Personal Loans. A personal loan provides a lump sum of money that you repay, along with interest, via regular installments over a set term. Personal loans can either be secured or unsecured. If you opt for a secured personal loan, you may be offered better rates and higher loan amounts because the collateral reduces the lender’s risk.
- Balance Transfers. If you have a lot of high-interest credit card debt you want to consolidate, then a balance transfer may be suitable. A credit card balance transfer involves moving balances from one credit card to a new one, usually with a much lower interest rate or a 0% introductory rate for a set term, usually 6 to 21 months.
| Will Consolidating My Debt Hurt My Credit? Consolidating your debt could have negative effects. Your credit may be negatively affected by any hard credit checks when getting the loan. Moreover, if you pay and close the credit accounts you are consolidating, it can reduce your credit account age and credit mix, which can negatively affect your credit. |
Debt Management Program
A debt management program (DMP) is a process that involves a credit counsellor negotiating with your creditors on your behalf to repay your debts in a way that is more affordable and manageable for you. You’ll initially meet with a credit counsellor, who will review your financial situation to determine if a DMP is suitable.
Then, your credit counsellor will negotiate with your creditors to reduce your interest rates, waive fees, or stop collection calls. If your creditors accept your payment arrangement, your debts will be consolidated into a single monthly payment. These payments are made to the credit counselling agency, which will then distribute the funds to your creditors.
DMPs usually last around 5 years, during which time you’ll make regular monthly payments until your debts are fully repaid according to the agreed-upon repayment schedule.
Debt Settlement
Debt settlement involves a representative from a debt settlement company negotiating with creditors to come up with a repayment plan that works for everyone involved. If the creditors agree to the proposed arrangement, you’ll make a lump sum payment to the debt settlement company, which will then pay and settle your debts with your creditors.
Learn more: How Will Debt Settlement Affect Your Credit
Consumer Proposal
A consumer proposal is a legally binding process that involves an LIT negotiating your debt with your creditors. Your LIT will propose a new repayment plan, and if your creditors agree to it, you’ll repay the agreed-upon portion of your debts over a set time frame, typically up to 5 years.
A consumer proposal may be an option if you have debts that are less than $250,000 (excluding mortgage debt). Depending on the situation, a consumer proposal can help lower your unsecured debts by up to 80%.
Learn more: Filing A Consumer Proposal In Ontario
Bankruptcy
Bankruptcy is another legal process that should only be considered as last resort, given the severe impact on your credit score. If you cannot repay your debts, then bankruptcy may be considered, as it provides a structured way to eliminate your debts while protected under the law. This is the most effective way to get rid of unmanageable debt, end collection calls, and stop legal fines.
Bankruptcy can only be administered by an LIT. To complete your bankruptcy, you’ll make payments to the court over 9 months (or up to 21 months if you have surplus income). Then, you’ll be discharged from bankruptcy.
Things To Remember When Getting Debt Help
Before settling on a specific course of action to deal with your debts, be sure to consider the following factors:
Your Rights
If you owe creditors money, they may take action to collect what’s owed to them. However, debt collection efforts are subject to strict rules in Ontario.
More specifically, debt collectors are regulated under the Collection and Debt Settlement Services Act (CDSSA), which sets strict rules to protect consumers from harassment and unfair practices. Here are a few of the rules debt collectors must adhere to:
- They must first send a written notice to you describing the debt before calling you.
- They cannot threaten you or use abusive language.
- They cannot call before 7 a.m. or after 9 p.m.
- They cannot contact your employer or family members unless permitted by law.
If you feel a debt collector is mistreating you, you can file a complaint with Consumer Protection Ontario:
- Mail:
- Ministry of Public and Business Service Delivery
- 77 Wellesley St. W
- PO Box 450
- Toronto, ON
- M7A 2J6
- Telephone: 416‑326‑8800 / 1‑800‑889‑9768
- Email: consumer@ontario.ca
Fraud/Scammers
While most credit counsellors are legitimate, fraudsters posing as professionals may try to take advantage of your financial vulnerability. To protect yourself, start by getting familiar with the following warning signs of a scam:
- Upfront fees are required before services are provided
- Guarantees to eliminate debt quickly or improve credit instantly
- Pressure tactics to sign documents
- Requests for personal or banking information via phone or email
- No physical office
To avoid getting scammed, take the following steps:
- Make sure the agency is registered with Consumer Protection Ontario
- Check for accreditation with organizations like Credit Counselling Canada
- Read online reviews
- Confirm their physical address and contact information
- Never share sensitive financial information until you’re sure it’s secure
Fees
There can be fees associated with credit counselling and LIT services in Ontario, but the structure of these fees varies depending on the type of help you’re seeking.
Fees for credit counselling can vary greatly by agency. Some may offer free initial consultations, though some may charge. Be sure to inquire about fees.
The fees that LITs charge are set by the government, which ensures fairness across all cases. These costs are built into the debt relief process, so you won’t have to pay them separately or up front.
Other Programs To Help Alleviate Your Expenses
If you’re struggling with debt, it can be hard to keep up with all your ongoing expenses. Here are a few programs that can help alleviate your expenses and help you manage your debt. You can use an online tool like www.211.ca to find local financial assistance programs, such as the following:
Rent Assistance
If you’re currently renting and are having trouble covering your rent payments, a local rent assistance program may be available to you. These programs are designed to help bridge the financial gap so you never miss a rent payment and avoid the risk of eviction.
Here are a couple of examples of Toronto-area rent assistance programs available to give you an idea of what’s out there:
Employment Assistance
If your financial troubles are the result of unemployment, there are employment services available to help you get a job. It can often be overwhelming to find work on your own, but partnering with an employment agency means they do the legwork for you.
Here are a few popular staffing agencies in Ontario to help you get a head start on your search for a new job:
- Quality Staffing Pro
- LRO Staffing
- Workforce Inc.
- Randstad
Utility Assistance
Financial woes can often risk being unable to cover utility bills, which can lead to potential disruption of service. If you’re in this position, you’ll be happy to know that several utility companies offer assistance programs designed to help prevent low-income residents from losing heat or power to their homes due to their inability to make bill payments.
Here are a few examples of such programs in Ontario:
- Hydro One Ontario Low-Income Energy Assistance Program (LEAP)
- Ontario Electricity Support Program (OESP)
- York Region Rent and Utility Assistance
Additional Government Benefits Available In Ontario
Debt FAQs
Will debt consolidation affect my credit score?
Can I consolidate my student loans?
What do I need to qualify for debt consolidation?
Are there risks with debt consolidation?
What types of debts can be consolidated?
®Fairstone Financial Inc. is a wholly owned subsidiary of Fairstone Bank of Canada.
*Interest rates are subject to change. Actual Annual Percentage Rate (APR) varies based on the province of residence and individual factors like credit details and loan amount. The interest rate on an unsecured personal loan is 31.99% in BC.
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