We know it can be overwhelming when you’re trying to decide which path to take to pay off your debts. Explore these debt relief options in BC if you’re unsure which path is right for you.
It’s okay to ask for help with your debt
Depending on your situation, you may decide to make your own plan to manage your debt. In other situations, it may be a good idea to seek out help from different professionals. If you’re trying to pay down debt and need help, don’t wait too long. Be proactive and seek help when you need it.
Compare your options and always research the company first
Not all businesses that offer debt solutions and debt repair are reputable and it’s important to always ensure you’re dealing with a legitimate business with a good reputation and standing. There are debt relief companies that do not have your best interest in mind and may mislead you so it’s important to do your research.
Comparing different debt relief options in BC
Here are some different debt relief options to explore if you need help managing debt. Some options have more long-term impacts on your credit score and may only be necessary for those who are in serious debt.
If the debt relief option you’re considering doesn’t fall under one of these categories and isn’t licensed or regulated, you may want to rethink using it.
1. Credit counsellors: Both not-for-profit organizations and for-profit companies offer credit counselling. Credit counsellors can offer a variety of different services, including one-on-one counselling, budgeting courses and tips. Using them for these things won’t affect your credit score. Learn more about credit counselling on the Financial Consumer Agency of Canada’s website.
Some credit counsellors offer debt repayment services. A credit counsellor cannot make repayment arrangements on your behalf unless they are licensed as a debt repayment agent with us. Find out if your credit counsellor is licensed to make repayment arrangements on your behalf as a debt repayment agent.
2. Debt repayment agents: A debt repayment agent is a person who helps negotiate with your creditors to reduce or eliminate the interest rates or fees on your debts or extend the time needed to pay off your debt. You pay them and they distribute the money to your creditor for a fee.
Participating in a debt management program won’t have a negative effect on your credit score – though there will be a note in your credit report about it. Learn more about debt repayment/settlement companies on the Financial Consumer Agency of Canada’s website.
In BC, anyone who charges a fee to negotiate with a creditor on your behalf is required to be licensed with us and must follow certain rules, particularly about the fees they charge. Learn the rules that debt repayment agents must follow in BC.
3. Licensed insolvency trustees (LITs): A LIT is a professional who is licensed federally by the Office of the Superintendent of Bankruptcy – they are regulated and subject to audits and reviews to ensure they are following the rules. A LIT will assess your financial situation and discuss the options available to you, including consumer proposals and bankruptcy.
It’s important to remember that both these options will have a significant impact on your credit score, your ability to use credit cards, and more. Ensure you understand all the implications and explore your options before making a decision:
Consumer proposals: A consumer proposal is a formal, legally binding process that is administered by a Licensed Insolvency Trustee (LIT). In this process, the LIT will work with you to develop a “proposal”—an offer to pay creditors a percentage of what is owed to them or extend the time you have to pay off the debts, or both.
If your total debts do not exceed $250,000 (not including debts such as a mortgage secured by your principal residence), a consumer proposal might be a choice to consider. Learn more about consumer proposals on the Office of the Superintendent of Bankruptcy website.
Bankruptcy: Bankruptcy is a legal process where your assets (with some exceptions) will be used to pay off your outstanding debts. At the end of the process, once all your duties have been fulfilled, you are legally released from the debts you had when the bankruptcy was filed (with some exceptions). Learn more about bankruptcy on the Office of the Superintendent of Bankruptcy website.
Where to go for help
Debt relief isn’t something we can help you with but there are other options to consider. The Financial Consumer Agency of Canada has tons of information about managing debt and more detail about the different debt relief options in Canada.
You may also be interested in speaking to your financial institution or a financial advisor to see if they can offer you personalized advice on your financial situation.
For information about debt repayment agents and the rules they have to follow, explore our website and learn your rights for these transactions in BC. If you believe a debt repayment agent is not following the rules, you can submit a complaint to us.
About Consumer Protection BC
We’re a not-for-profit provincial regulator. The laws we oversee capture your rights when it comes to credit reporting, debt collection, payday loans, high-cost loans, and certain aspects of debt repayment services. Find out more about us and the other industries and transactions we oversee by exploring our website.
Learn more about your rights when it comes to debt and borrowing.
More debt and borrowing resources
Managing debt
How to make a plan to manage your debt
Comparing different debt relief options
The impact of debt on your credit report
How to improve your credit score
How to build healthy financial habits
Debt collection
How to stop collection calls
What to do if it’s not your debt
The rules debt collectors must follow in BC
How to dispute a debt
Borrowing wisely
Things to think about before you take out a loan
Understanding the cost of your loan
The rules for payday lenders in BC
The risks of borrowing money from unlicensed lenders
Buy now, pay later plans: what you need to know
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The information above is part of a consumer education initiative on debt and borrowing in BC and we want your input!
By completing the survey, you will be entered to win one of two $300 prizes and you’ll support consumer education in the province. Your feedback will help us fine-tune our educational resources so we can continually improve and help more people make informed debt choices in BC.
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