Is there a debt forgiveness program in Canada?

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In Canada, you could say there is an official debt forgiveness program with options like a Consumer Proposal can slash debt by up to 80%, while bankruptcy wipes out unsecured debts. Be wary of debt settlements as they’re not as regulated, and Debt Management Plans can’t erase debt. Always consult a reputable Licensed Insolvency Trustee—remember, not all trustees can be trusted. Licensed Insolvency Trustees are paid by lenders and creditors, not by Canadians in debt. They may also double bill or charge extra fees. Be cautious! Contact us by phone, text, or live chat if you have questions.

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Debt Forgiveness Program Canada Question

Is there a debt forgiveness program in Canada? My friend mentioned that some countries have debt forgiveness programs. With my growing debt, I’m wondering if there’s anything like that in Canada. I want to know if the government or creditors ever forgive or cancel certain types of debt, and if I might qualify.

From: Anonymous Question
Location: Windsor, Ontario (ON)
Category: consumer proposal

Debt Forgiveness Program Canada Answer

In Canada, there isn’t a government-endorsed debt forgiveness program available. Don’t worry, though! You’ve got some solid options to tackle unmanageable debt. Consider a consumer proposal which might slash your debt by up to 80%, or look at bankruptcy for wiping out most unsecured debts—both stop interest in its tracks and protect you from creditor actions. These solutions also come with a roadmap for repayment, all overseen by trusty Licensed Insolvency Trustees (LITs). And for those student loans? You can discharge them if it’s been seven years since you graduated.

You might have stumbled across alternatives like debt settlement, but be cautious—they’re less regulated. Cooperation from creditors isn’t always guaranteed, which can lead to less-than-ideal outcomes. Debt Management Plans (DMPs) are another route for structured repayments, but they won’t erase your debts. It’s smart to have a chat with a reputable Licensed Insolvency Trustee to find a path that best suits your situation. Remember, not all trustees are created equal, so choose wisely. Trustees are funded by lenders and creditors, meaning they don’t work in the best interest of Canadians in debt. They can also double bill or add extra charges. If you’ve got questions, don’t hesitate to connect via phone, text, or live chat.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

In Canada, there is not a direct debt forgiveness program similar to some other countries. However, certain mechanisms can result in the reduction or cancellation of debt, especially through processes like consumer proposals or personal bankruptcy. A consumer proposal allows individuals to negotiate with creditors to pay back a portion of the debt over time, which can lead to the cancellation of the remaining amount after successful completion (Bankruptcy and Insolvency Act, RSC 1985, c 11, Part III). Personal bankruptcy can also discharge most unsecured debts, providing a fresh start (Bankruptcy and Insolvency Act, RSC 1985, c 11, Section 171 and 172).

For specific types of debt like government loans or taxes, there may be additional programs or considerations, but these typically involve individual negotiations rather than blanket forgiveness policies. It is advisable to consult with a licensed insolvency trustee to explore your options based on your financial situation.

From: OSB Helper

Related Questions to Debt Forgiveness Program In Canada

Here are the top 5 most frequently asked questions related to debt forgiveness in Canada, along with brief answers:

1. Is there a government-backed debt forgiveness program?

No, there are no government-backed debt forgiveness programs, but there are debt relief options available.

2. Can I get my credit card debt forgiven?

Credit card debt forgiveness is up to the creditor and can be achieved through a consumer proposal or negotiations with the credit card company.

3. Are there any debt forgiveness programs for student loans?

Yes, there are student loan forgiveness programs, such as the BC Loan Forgiveness Program and federal loan forgiveness for doctors and nurses working in rural or remote areas.

4. What is the difference between a consumer proposal and debt settlement?

A consumer proposal is a legally binding agreement administered by a Licensed Insolvency Trustee, while debt settlement is an informal negotiation with creditors, often through unregulated companies.

5. Can I negotiate with creditors on my own for debt forgiveness?

Yes, you can negotiate with creditors directly, but this does not offer the same legal protections as a consumer proposal.

If you have a question about debt see our debt questions or ask your own debt related question.

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