Debt Relief In Newfoundland And Labrador: A Complete Guide
Struggling with debt in Newfoundland and Labrador? You’re not alone. Thankfully, there are several solutions designed to help you deal with your debt and take back control of your finances. From government-backed programs to credit counselling and legal options like consumer proposals, residents have access to a range of support.
This guide will walk you through the more common debt relief options in Newfoundland and Labrador to help you decide which path makes most sense for you.
What Debt Relief Programs Are Available In Newfoundland & Labrador?
If you’re drowing in debt, consider these options:
| Debt Consolidation Loan | A debt consolidation loan merges several debts into a single loan with a lower interest rate and a fixed repayment schedule, making it easier to manage payments. It helps reduce monthly payments and simplifies your debt repayment process. |
| Debt Consolidation Program | A debt consolidation program is a structured plan offered by a credit counselling agency to help you pay off multiple debts through negotiated lower interest rates or payment terms. It aims to reduce your overall debt burden, improve your financial stability, and may involve consolidating debts into a single monthly payment, without the need to take out another loan. |
| Consumer Proposal | A consumer proposal is a formal debt relief arrangement filed with a Licensed Insolvency Trustee (LIT), allowing you to negotiate to pay back a portion of your debts over a specific period. It is a legal alternative to bankruptcy that can help you avoid surrendering your assets while reducing your total debt obligations. However, your credit score will suffer. |
| Bankruptcy | Bankruptcy is a legal process that provides relief when you’re unable to pay your debts by legally discharging most unsecured liabilities, giving you a fresh financial start. However, it has long-term impacts on your credit score and may require you to give up some of your assets. |
Consumer Debt Levels In Newfoundland & Labrador: How Do You Compare?
Understanding where your personal debt stands in relation to the provincial average is a helpful step in financial management. As of the first quarter of 2025, the average non-mortgage consumer debt level in Newfoundland and Labrador is $24,770, representing a 4.02% increase from the same quarter last year. This increase can be attributed to ongoing inflationary pressures, sluggish wage increases, and the elevated cost of housing.
By comparing your outstanding balances to this provincial benchmark, you can better gauge your financial risk profile and determine whether seeking expert help should be your next step.
Looking For Debt Help In Newfoundland And Labrador?
If you’re feeling overwhelmed by debt and your efforts haven’t worked, it may be time to seek professional support. Credit counselling services can assist with coming up with a realistic repayment plan, organizing your budget, and identifying tailored financial solutions.
If you’re considering more serious debt relief options — such as bankruptcy or consumer proposal — you’ll need to work with a Licensed Insolvency Trustee. These professionals are federally regulated and are the only ones authorized to oversee these legal processes.
| Are Credit Counsellors Licenced In Newfoundland And Labrador? Credit counsellors are not required to hold a formal licence in Newfoundland and Labrador. This is unlike LITs, who are licensed and regulated by the Office of the Superintendent of Bankruptcy (OSB) in Canada. |
Finding Debt Support In Newfoundland And Labrador
Whether you’re looking for budgeting help or exploring formal debt relief options, there are several organizations across Newfoundland and Labrador that specialize in credit counselling and insolvency services. Here are a few to consider:
| Agency | Services | |
| Credit Counselling Services of Newfoundland and Labrador | – Budgeting and money management assistance – Credit management – Debt consolidation programs | Learn More |
| Bromwich+Smith | – Consumer proposals – Bankruptcy – Debt relief consultation | Learn More |
| BDO Debt Solutions | – Debt counselling – Consumer proposals – Bankruptcy | Learn More |
Check out these online resources to help you find a credit counsellor or LIT near you:
Debt Consolidation Loans
A debt consolidation loan is a financial product designed to merge multiple outstanding debts, such as credit card balances or personal loans, into a single loan. The main benefits include saving money thanks to a lower rate on the new loan, and managing only one loan payment rather than several.
Successfully managing a debt consolidation loan can also help improve your credit score, as long as you consistently make timely payments.
Loans that you can take out to consolidate your debt include the following:
- Personal Loans: A personal loan gives you a lump sum of money that you repay through regular, fixed payments over a set period. These loans may be secured, which means they’re backed by assets like a vehicle or savings, often resulting in lower interest rates and higher borrowing limits. Unsecured personal loans, on the other hand, don’t require collateral and typically come with higher interest rates due to increased risk for the lender.
- Second Mortgages: Homeowners can tap into the equity in their property by applying for a second mortgage, which can be used to consolidate existing debts. These loans generally offer more favourable interest rates than unsecured borrowing options, making them a cost-effective solution for managing multiple debts.
- Balance Transfers: For those carrying large credit card balances, a balance transfer card can be a strategic tool. It allows you to move your credit card debt from high-interest cards to one offering a low or 0% interest rate, helping you save on interest, as long as you’re able to pay off the transferred amount within the promotional window.
Debt Management Program (DMP)
A debt management program is facilitated by a credit counselling agency to help you repay your unsecured debts over a certain period of time. The agency works on your behalf to negotiate reduced interest rates, waive fees, and stop collection calls.
Unlike other options, a DMP generally requires repaying the full principal amount, but the process has a less severe impact on your credit score compared to insolvency.
Learn more: Debt Management Program (DMP)
Debt Settlement
Debt settlement involves a direct negotiation with creditors to accept a lump-sum payment that’s less than the total outstanding balance owed on a debt. While it reduces the debt amount, debt settlement can severely damage your credit score.
Consumer Proposal
A consumer proposal is a formal, legally binding insolvency solution administered by an LIT. It allows you to propose an arrangement to your creditors to pay back only a portion of your total debt, or pay the full amount over a longer period, usually without losing any assets.
Once the proposal is accepted by creditors, it stops all collection calls and legal action, though your credit score will take a hit.
Bankruptcy
Bankruptcy is a last-resort legal process overseen by a Licensed Insolvency Trustee that offers a fresh financial start by eliminating most or all unsecured debts. In exchange for this debt discharge, you’ll need to surrender any non-exempt assets and may be required to make surplus income payments based on your income and family size.
While it provides fast debt relief, bankruptcy has the most significant negative consequences on your credit score.
Things To Keep In Mind When Seeking Debt Help In Newfoundland And Labrador
Before choosing a debt relief option, it’s essential to understand your rights, be aware of potential scams, and keep an eye out for any service fees.
Know Your Rights
If you owe money, creditors may attempt to collect it, but their actions are regulated under Newfoundland’s Collection Agents Act. This law requires debt collectors to:
- Hold a valid licence to operate in the province
- Avoid harassment, false claims, or contacting you outside of specific hours
- Obtain a court order before taking legal action (only within the statute of limitations)
- Provide written notice must be provided before any collection efforts begin
If you feel that your rights have been violated, contact Consumer Affairs to have the situation investigated:
- Telephone: 1-877-968-2600
- Email: consumeraffairs@gov.nl.ca
Watch Out For Scams
While many credit counselling services are legitimate, some dishonest agencies may try to exploit those in financial distress. To protect yourself, be cautious of the following:
- Requests for payment before services are provided
- Promises of instant credit repair or debt elimination
- High-pressure tactics to sign contracts
- Requests for sensitive financial details over the phone
- Lack of a physical office or contact information
Before working with a credit counsellor, do the following:
- Check reviews from other clients
- Confirm the agency’s contact details and location
- Never share personal financial information until you’re sure the agency is trustworthy
Understand Service Fees
Credit counselling and Licensed Insolvency Trustee services may involve fees. Some counselling agencies offer free initial consultations, but ongoing support may come with costs, so always ask for a full breakdown.
LIT fees are regulated and typically included in the overall debt solution, so separate payments are rarely required.
Additional Support Programs In Newfoundland And Labrador
In addition to the debt relief strategies already mentioned, a range of assistance programs are available to help residents handle everyday financial pressures. These initiatives are designed to support individuals and families with essentials like housing, food, utilities, and more. Below are a few examples of programs that may offer valuable support:
Food Banks
Food banks in Newfoundland play a vital role in supporting individuals and families facing food insecurities due to rising living costs and limited income sources. Here are a few food banks in the province that are available:
- Bridges to Hope Food Aid Centre: 37 Cookstown Rd, St. John’s, NL A1C 4G7
- Food First NL: 77 Charter Ave, Suite 100, St. John’s, NL A1A 0N2
- MUN Campus Food Bank: 21 Burtons Pond Rd, St. John’s, NL A1B 3S7
Learn more: How To Find Food Banks In Canada
Housing Shelters
Emergency housing shelters in Newfoundland and Labrador are essential for providing safe, temporary refuge to individuals and families facing homelessness, domestic violence, or sudden financial hardship. Here are a few available shelters in the province:
- The Naomi Center: 4 Patrick St, St. John’s, NL A1E 2S6
- Libra House: Happy Valley-Goose Bay, NL A0P 1E0
- The Salvation Army Wiseman Centre: 714 Water St, St. John’s, NL A1E 1C1
Home Heating Supplement Program
To avoid interruption of heating in your home due to lack of bill payment, the Home Heating Supplement Program may help. This program provides financial support to residents who use stove or furnace oil to heat their primary residence. Eligible households can receive a supplement ranging from $200 to $500, depending on their income level.
Rent Assistance
If you’re having trouble making rent payments every month, you may be eligible for assistance under the Rental Housing Program. This program provides affordable housing to low-income individuals, families, seniors, and persons with disabilities through units managed by the Newfoundland and Labrador Housing Corporation (NLHC). Rent is typically calculated at 25% of the tenant’s net monthly income, making it more accessible for those who cannot afford market-rate housing.
FAQs On Debt Relief In Newfoundland & Labrador
What types of debts can be consolidated?
What are the benefits of a consumer proposal?
Who is debt consolidation best for?
How does debt consolidation differ from debt settlement?
Can debt settlement hurt your credit score?
®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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