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Struggling with debt: credit counselling, consumer proposal or bankruptcy

The three official paths, who can arrange each, what they do to your credit and how to avoid debt-relief scams.

First step

Talk to a credit counsellor or a licensed insolvency trustee (LIT). Many LITs do not charge for the first meeting. When someone offers help with debt, ask: "Are you a licensed insolvency trustee?" Debt-relief scams often promise consumer proposals or bankruptcy falsely.

The three paths

  • Credit counselling (debt management plan): an informal arrangement where a counsellor proposes one affordable monthly payment to your creditors. You usually repay 100% of the debt. Just talking to a counsellor does not affect your credit score.
  • Consumer proposal: a formal plan, arranged only through a licensed insolvency trustee, to repay part of what you owe or to stretch out payments. For total debts under $250,000 (not counting your mortgage); payments last at most five years; you keep your assets as long as you pay your secured creditors. It stays on your credit record for its term plus three years.
  • Bankruptcy: the Office of the Superintendent of Bankruptcy advises it only as a last resort. The trustee takes assets beyond those exempt under provincial or territorial law and sells them to pay creditors and fees. A first bankruptcy is usually removed from your credit report six or seven years after discharge, depending on the province.

Consumer proposals and bankruptcy can only be arranged through a licensed insolvency trustee. The Office of the Superintendent of Bankruptcy publishes a Debt Solutions Portal and a directory of licensed trustees.

You owe money (Office of the Superintendent of Bankruptcy) ↗ · Getting help from a credit counsellor (FCAC) ↗ · Consumer alert: debt help and credit repair ↗

Sources and limits

Read on November 14, 2026 on Canada.ca. General information, not legal or financial advice.

General information based on federal and national rules; provincial rules may differ. Confirm with the official body before acting. Last reviewed : 2026-11-14.