Many people across PEI are feeling the pressure of personal debt, especially when life throws unexpected curveballs their way, like job loss, disability, or financial emergencies. Thankfully, help is available when everyday expenses become hard to manage.
In this guide, we’ll break down the most common debt relief solutions available in PEI and how they work.
Debt Relief Programs In PEI
The following debt relief options are available in PEI. Choose the one that best suits your situation and needs:
Debt Consolidation Loan
A debt consolidation loan combines multiple debts into one new loan, typically with a lower interest rate. It simplifies your finances by turning several payments into one, and can reduce the total interest you pay over time.
Debt Consolidation Program
Unlike a loan, a debt consolidation program doesn’t involve borrowing. A credit counsellor works with your creditors to consolidate your payments into a single monthly amount. It’s a structured, manageable way to tackle debt without taking on new credit.
Consumer Proposal
A consumer proposal is a formal agreement to pay back part of your debt over a set period. If accepted by your creditors, your consumer proposal stops collection calls and interest charges. You keep your assets and settle your debts for less than you owe, which is a big advantage over bankruptcy.
Bankruptcy
Bankruptcy is a legal process that eliminates most unsecured debts and stops wage garnishments and collection efforts. While it offers a fresh financial start, it negatively affects your credit and may involve giving up certain assets.
How Does Your Debt Stack Up Against Others In PEI?
As of the first quarter in 2025, the average non-mortgage debt in PEI sits at $23,707, a 4.09% increase from the same time last year. Rising housing costs, inflation, and stagnant wages have all contributed to this upward trend.
Comparing your own debt to this level can help you assess your financial health and determine whether it’s time to seek support. If your debt load is well above the provincial average, it might be a sign to look into debt relief options before things become harder to manage.
Where To Turn For Help
If you’re feeling overwhelmed by debt, you’re not alone, and you don’t have to deal with it alone either. Credit counselling services are available to help you come up with a realistic budget, create a repayment plan, and explore tailored solutions based on your situation.
If you’re experiencing more serious financial challenges, you may consider bankruptcy or a consumer proposal. In this case, it’s best to speak with a Licensed Insolvency Trustee (LIT). They’re the only professionals authorized to guide you through these legal processes and help you reset your financial future.
| Are credit counsellors required to be licenced in PEI? No, credit counsellors do not have to be licensed in PEI, unlike LITs. |
How To Find Debt Help In PEI
If you’re struggling with debt and need expert guidance, a range of trusted professionals are available in PEI who can help you take control of your finances. Whether you’re looking for budgeting support, debt consolidation advice, or legal solutions like bankruptcy or a consumer proposal, the right help is available.
Here are some trusted credit counselling agencies and Licensed Insolvency Trustees (LITs) in PEI:
| Agency | Services | |
| Consolidated Credit | Credit counselling Debt management Debt consolidation Consumer proposal Bankruptcy | Learn More |
| BDO Debt Solutions | Debt counselling Consumer proposals Bankruptcy | Learn More |
| Credit Counselling Canada | Credit counselling Financial literacy guidance Debt repayment | Learn More |
Here are a few resources to help you find a credit counsellor or LIT near you:
Debt Consolidation Loans
Debt consolidation loans offer a practical way to manage multiple debts by rolling them into a single loan. This approach can simplify your monthly payments and even lower the total interest you pay. This is especially true if you’re juggling high-interest debt, like credit cards or unsecured personal loans.
Here are a few common ways to consolidate debt:
- Personal Loans: These provide a lump sum that you repay in fixed installments over time. Secured personal loans are backed by assets, like a car or savings, and often come with lower interest rates and higher borrowing limits. Unsecured loans don’t require collateral, but typically come with higher rates and lower borrowing limits due to increased lender risk.
- Second Mortgages: Homeowners can tap into their property’s equity through a second mortgage to pay off existing debts. These loans typically offer lower interest rates than unsecured loan programs, making them a more affordable solution for larger balances.
- Balance Transfer Credit Cards: If you carry a lot of high-interest credit card debt, moving your balances to a card with a promotional 0% or very low interest rate can help you save on interest. To maximize the benefit, aim to pay off the transferred amount before the promotional period ends.
Learn more: How To Do A Balance Transfer With A Credit Card
Will Debt Consolidation Affect Your Credit Score?
Yes, debt consolidation can impact your credit score, but the degree of its effect depends on how you manage it. Initially, your score might dip slightly due to the hard credit check. Your score may also take a slight hit when closing old credit accounts.
However, over time, consistent on-time payments and reduced overall debt can help your credit score recover and improve over time. When used responsibly, debt consolidation can be a positive step toward stronger financial health.
Debt Management Program (DMP)
A debt management program is a voluntary repayment plan arranged through a credit counselling agency. It allows you to consolidate your unsecured debts, like credit cards and personal loans, into one affordable monthly payment. The credit counsellor negotiates with creditors to reduce or eliminate interest charges, making it easier to pay off the debt over time.
Most DMPs are completed within 3 to 5 years, depending on the amount owed and your financial situation. While it may temporarily affect your credit, successfully completing a DMP can help you rebuild financial stability.
Debt Settlement
Debt settlement is a process that involves negotiating with creditors to pay an amount that’s less than the full amount you owe. It’s typically used if you can’t repay your debts in full but want to avoid bankruptcy.
Debt settlements can be negotiated through a debt settlement company. You’ll make a lump-sum payment to this agency, which will then distribute the funds to your creditors to settle your debt. While this option can reduce your overall debt, it will negatively impact your credit score.
Consumer Proposal
A consumer proposal is a legal agreement between you and your creditors for you to repay a portion of your debt over a set period, typically up to 5 years. It’s administered by an LIT and allows you to avoid bankruptcy without having to give up your assets.
Once accepted, all collection actions and interest charges stop, giving you some time to make manageable payments. It’s a popular option for those who can’t repay their debts in full but want a structured path to financial recovery. However, your credit score will suffer.
Learn more: Consumer Proposals Prince Edward Island
Bankruptcy
Bankruptcy is a legal process that can help you wipe out most unsecured debts if you can’t pay them back. It’s administered by a Licensed Insolvency Trustee, who will guide you through filing and communicating with your creditors.
Once filed, collection actions like wage garnishments and calls stop immediately, offering you prompt relief from your debts and a fresh start. However, bankruptcy will severely impact your credit rating and may require surrendering certain assets, depending on your financial situation.
What To Know Before Seeking Debt Help In PEI
Before choosing a debt relief option, it’s important to consider the following:
Your Consumer Rights
Be sure to understand your rights as a consumer and the rules that protect you. In PEI, debt collection is primarily governed by the provincial Statute of Limitations Act, which sets a 6-year period that debt collectors may sue for a debt. Federal consumer protection laws are also in place that prevent harassment when a debt collector attempts to recoup unpaid balances.
Here are key protections you should be aware of:
- Licensing Is Mandatory: All collection agents must be officially licenced to operate in PEI.
- Harassment Is Prohibited: Collectors cannot use aggressive tactics, spread false information, or contact you outside of permitted hours.
- Written Notice Is Required: Creditors must send formal written communication before calling you for repayment.
Knowing these rules can help you navigate debt solutions with confidence and ensure you’re treated fairly throughout the process.
If you believe you’re being treated unfairly by a creditor or debt collector in PEI, you can file a complaint with the Financial and Consumer Services Division.
- By Mail:
- Financial and Consumer Services Division
- Shaw Building, 1st Floor N, 105 Rochford St.
- PO Box 2000
- Charlottetown, PE C1A 7N8
- By email: ccs@gov.pe.ca
Loan Scams
Fraudsters lurk in various industries, including the lending sphere. Before agreeing to a loan contract, make sure you’re familiar with common loan scams to protect yourself.
The following are some key red flags to watch out for:
- Upfront Fees Before Approval: Legitimate lenders never ask for payment before granting a loan.
- Guaranteed Approval Without Vetting: Real lenders assess your financial health and creditworthiness before offering funds.
- Pressure To Act Quickly: Scammers often push you to decide immediately and sign a loan contract without much time to think about it.
- No Physical Address Or Website: A lack of official contact information or presence online or physically are red flags.
- Requests For Unusual Payment Methods: Demands for payment via gift cards, wire transfers, or cryptocurrency should be considered very suspicious.
To protect yourself against a loan scam, consider the following tips:
- Read The Fine Print: Always review loan terms carefully before signing anything.
- Don’t Share Personal Information Too Soon: Don’t give out your SIN, banking details, or ID until you’re sure the lender is legitimate.
- Research Reviews: Look up the company online to see what others are saying.
- Verify Their Credentials: Make sure the lender is licensed in PEI to confirm their legitimacy.
- Trust Your Instincts: If something feels off or too good to be true, walk away.
Learn more: Loan Scams In Canada
Fees
When seeking support from credit counsellors or LITs in PEI, it’s important to be aware of potential costs.
While many credit counselling agencies offer free initial consultations, ongoing services may come with fees. So, make sure you ask for a full breakdown of possible costs before committing.
On the other hand, LITs operate under government regulations, and their fees are generally included in a consumer proposal or bankruptcy. That means you typically won’t need to make separate or upfront payments for their services.
Still Need Financial Help? Check Out These Other Programs
If you’re struggling to afford essentials like groceries, rent, utilities, or other daily expenses, there are support programs available to help ease the burden. A great starting point is www.211.ca, a national online resource that connects Canadians with local services tailored to their needs. Depending on your specific needs, here are a few local programs in PEI to check out:
Emergency Shelters
If you’re facing homelessness or unsafe living conditions, emergency shelters offer temporary housing. Some shelters keep their locations private for safety reasons, so it’s best to contact them directly for access. A few options available across PEI are as follows:
- Park Street Emergency Shelter: 15 Park Street, Charlottetown, PEI C1A 5G7
- Bedford MacDonald House: 184 Weymouth Street, Charlottetown, PEI C1A 4Z3
- Community Outreach Centre: 15 Park Street, Charlottetown, PEI C1A 5G7
Free Clothing
Several community organizations provide donated clothing at no cost, especially helpful during colder seasons. These outlets ensure residents in need have access to warm and appropriate attire.
One service available is Coats for Kids provided by Salvation Army, located at 158 Fitzroy Street, Charlottetown, PEI C1A 1S1.
Affordable Housing Support Programs
Housing Services are available to low-income families, like the Family Housing Program provided by the government of PEI. This program offers affordable rental units in several PEI communities or rent supplement benefits for private market housing. Rent calculation is typically based on 25% of total household gross income.
Home Heating Assistance
The Salvation Army – Maritime Division runs a heating assistance program for low-income households in PEI. Eligible applicants may receive up to $1,200 toward heating costs, but only for arrangements made through the Salvation Army.
Social Assistance
Social Assistance in PEI is available to residents who are struggling to afford essential living expenses, like food, shelter, and utilities. Payment amounts are based on your household income, size, and living circumstances. Benefits are typically issued once a month, usually near the end of each month.
