Debt Relief in Canada (2026): Every Option Explained & How to Get Help

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✍️ Written & fact-checked by the LoanWave Editorial Team · Last reviewed October 8, 2026 · Sources: Bank of Canada, FCAC, OSB, Equifax Canada

If you’re juggling credit card balances, payday loans, a line of credit and collection calls, you’re not alone — millions of Canadians carry high-interest consumer debt. The good news: Canada has several legitimate, regulated paths to get out of debt. The right one depends on how much you owe, your income and how quickly you need relief.

This page explains every major debt relief option in Canada, honestly, so you can choose with confidence.

Debt in Canada by the numbers

You’re far from alone. Equifax Canada data shows Canadians carried $2.68 trillion in consumer debt in Q2 2026, including $134.2 billion on credit cards. Data from the Office of the Superintendent of Bankruptcy shows 140,669 consumer insolvencies in the 12 months to January 31, 2026 — roughly 385 every day — and 78.4% of them were consumer proposals rather than bankruptcies. In other words, most Canadians who use a formal debt solution choose the option that lets them keep their assets.

Signs you may need debt relief

• You only make minimum payments and balances never shrink
• You use credit to pay for groceries, rent or other debt
• You’re getting calls from collection agencies
• Your wages are being garnished or you’ve been threatened with legal action
• Debt is affecting your sleep, health or relationships

Option 1: Debt consolidation loan

A debt consolidation loan rolls several high-interest debts into one loan with a single monthly payment — ideally at a lower rate. Best for: steady income, fair-to-good credit, debt that’s manageable with a better rate.

• ✅ One payment, fixed end date, can improve credit with on-time payments
• ⚠️ Requires approval; doesn’t reduce the principal you owe

Option 2: Credit counselling & debt management plan (DMP)

Non-profit credit counselling agencies can review your budget and may set up a debt management plan: you make one payment to the agency, which pays your creditors — often with reduced or waived interest. Best for: unsecured debt you can repay in full within about 5 years if interest stops.

Option 3: Consumer proposal

A consumer proposal is a legal agreement under the Bankruptcy and Insolvency Act, filed through a Licensed Insolvency Trustee (LIT). You offer creditors a portion of what you owe, paid over up to 5 years. If accepted, the remaining unsecured debt is legally forgiven. It’s available when unsecured debts (excluding a mortgage on your principal residence) are $250,000 or less.

• ✅ Can reduce what you owe significantly; you usually keep your assets
• ✅ Stops most collection calls and wage garnishments
• ⚠️ Recorded on your credit report for several years

Option 4: Bankruptcy

Bankruptcy is a legal process, also handled by an LIT, that eliminates most unsecured debts. It’s typically a last resort. Compare the two in our guide: consumer proposal vs bankruptcy.

Debt relief options compared

Watch out for debt relief scams

Be cautious of any company that:

• Charges large upfront fees before doing anything
• Guarantees your debt will be erased or your credit “fixed”
• Tells you to stop talking to your creditors or a Licensed Insolvency Trustee
• Pressures you to sign immediately

Only Licensed Insolvency Trustees can administer consumer proposals and bankruptcies in Canada. You can verify a trustee’s licence with the Office of the Superintendent of Bankruptcy.

How LoanWave helps

LoanWave is not a debt relief company, lender or trustee. We’re a free comparison service that connects Canadians with third-party debt relief providers and consolidation lenders. Answer a few questions to see options that may fit your situation — there’s no cost and no obligation.

Sources & methodology

This guide was researched and fact-checked by the LoanWave editorial team against Canadian government sources, federal law and national credit bureau data. Figures are the latest published at the time of review; lender rates and terms change often, so always confirm the final cost in your loan agreement. Example calculations use standard amortization formulas and are for illustration only. LoanWave earns referral commissions, but partners do not review or approve our editorial content.

1. Office of the Superintendent of Bankruptcy Canada
2. Wealth Professional — Consumer insolvencies top 140,000 (OSB data, 12 months to Jan 31, 2026)
3. Wealth Professional — Canada's consumer debt hits $2.68 trillion in Q2 2026 (Equifax data)
4. Financial Consumer Agency of Canada — Credit reports and scores
5. Cassels — Changes to Canada's criminal rate of interest (35% APR, Jan 1, 2025)

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