If you are dealing with high debt in Calgary, Edmonton, Red Deer, Medicine Hat, Lethbridge or anywhere else in Alberta, you are not alone. Albertans hold the most consumer debt out of any province in Canada, according to a recent article by CTV News. In this page, we’ll cover the best debt relief programs available for Albertans.
Debt Relief Programs for Albertans
If you are in Calgary, Edmonton or in any big city, you should have access to a variety of financial professionals who can help you deal with your debt. Options offered include:
1. Credit Counselling Services
Credit counseling services in Alberta are provided by nonprofit organizations such as Consolidated Credit of Canada, Credit Counselling Society and Money Mentors. These nonprofits offer free advice and will recommend the best course of action given your financial situation. They typically don’t charge any upfront fees, and can negotiate with your creditors to substantially lower your debt. They also offer budgeting advice, debt management programs, and financial education.
How It Works: A certified credit counselor will review your financial situation, help you create a budget, and recommend the best course of action, whether it’s a DMP, debt consolidation, or another solution.
Eligibility: Credit counseling services are available to all Albertans struggling with debt, regardless of the amount owed. The three nonprofits we discussed earlier have offices in Calgary, Edmonton, Red Deer, Medicine Hat, and Grande Prairie.
Benefits: Free advice, personalized financial solutions based on your own situation, and ongoing support.
More Information: Contact a nonprofit credit counseling agency in Alberta for a free consultation.
2. Orderly Payment of Debts (OPD) Program
The Orderly Payment of Debts (OPD) program is unique to Alberta and is designed to help residents consolidate their debts into one manageable monthly payment.
How It Works: Under the OPD program, your unsecured debts are consolidated into one single payment, and you make this payment to Money Mentors, one of the most popular debt consolidation companies. They then distribute payments to your creditors on your behalf. The interest rate is reduced to 5%, and collection activities from creditors are stopped once the program begins.
Eligibility: You must have a stable source of income and be able to prove it. You must also be unable to pay your debts as they come due. The program is suitable for those with unsecured debts like credit cards, personal loans, and lines of credit.
Benefits: Lower interest rates, protection from creditors, and a structured repayment plan.
More Information: Visit Money Mentors for details.
3. Consumer Proposal
A consumer proposal is a formal agreement between you and your creditors to repay a portion of your debt over a set period (up to five years). This strategy can help you lower your debt significantly, often reaching 70%+ discount. This option is available to all Canadians, including Albertans, and is administered by a Licensed Insolvency Trustee (LIT).
How It Works: You propose to pay back a portion of your debt based on what you can afford. If the majority of your creditors accept the proposal, you make regular payments to the LIT, who then distributes the funds to your creditors. The remaining debt is forgiven once the proposal is completed.
Eligibility: To qualify, your total debt must be less than $250,000 (excluding your mortgage). Consumer proposals are suitable for individuals who have a steady income but cannot manage to pay off their debts in full.
Benefits: Avoid bankruptcy, protect your assets, and significantly reduce your total debt owed.
More Information: You can contact a Licensed Insolvency Trustee in Alberta, or a credit counselling agency, to learn more about this option.
4. Bankruptcy
Most Albertans are familiar with this word. It can wipe off most of your debt but comes with heavy consequences on your credit rating. Bankruptcy is a legal process that provides a fresh start by eliminating most of your debts. In Alberta, like the rest of Canada, bankruptcy is administered by a Licensed Insolvency Trustee.
How It Works: When you file for bankruptcy, you surrender certain assets to your trustee, who sells them to repay your creditors. Most unsecured debts are discharged at the end of the bankruptcy period, which typically lasts nine months to three years, depending on your situation.
Eligibility: Bankruptcy is suitable for individuals who are insolvent (meaning they are unable to pay their debts) and have no other choice for debt relief.
Benefits: Immediate relief from creditor actions, discharge of most debts, and a fresh financial start.
More Information: Contact a Licensed Insolvency Trustee in Alberta for a free consultation. The Canadian Government’s website keeps an updated list of all of them.
5. Debt Management Program (DMP)
A Debt Management Program (DMP) is similar to an OPD, in the sense that it is a voluntary agreement between you and your creditors to repay your debts over a period of time, typically three to five years. Nonprofit credit counseling agencies in Alberta, such as Consolidated Credit of Canada, Money Mentors or Credit Counselling Society, administer DMPs.
How It Works: The credit counseling agency negotiates with your creditors to reduce interest rates and create a single monthly payment plan that fits your budget. The agency distributes your payments to your creditors.
Eligibility: DMPs are suitable for individuals in Alberta with unsecured debts who need help organizing their payments but don’t qualify for a consumer proposal or OPD.
Benefits: Lower interest rates, protection from collection activities, and a simplified payment plan.
More Information: Contact a nonprofit credit counseling agency in Alberta for more information.
6. Debt Consolidation Loan
A debt consolidation loan combines multiple debts into a single loan with a lower interest rate and one monthly payment. However, be careful if you choose this route. Your interest rate MUST be lower than the one of your existing debts, or this strategy will backfire and end up costing you more in the end. Many financial institutions in Alberta, including banks and credit unions, offer debt consolidation loans.
How It Works: You apply for a lower-interest loan that is large enough to pay off all your existing debts. You then make one payment to the lender instead of multiple payments to various creditors.
Eligibility: To qualify, you typically need a good credit score and a stable income. The loan must offer a lower interest rate than your current debts to be effective.
Benefits: Simplified payments, lower interest rates (ideally!), and a structured repayment plan.
More Information: Speak to your bank or credit union in Alberta to explore debt consolidation loan options.
7. Alberta Works Emergency Financial Assistance
Alberta Works provides emergency financial assistance to Alberta residents facing unexpected financial crises, such as job loss, eviction, or utility cut-offs. While not a debt relief program per se, this assistance can help you stabilize your situation and prevent further debt accumulation.
How It Works: If you qualify, Alberta Works (Alberta Supports) can provide emergency funds to cover essential needs like food, shelter, and utilities. This can help you avoid falling deeper into debt.
Eligibility: You must be an Alberta resident facing an urgent financial need and meet income and asset thresholds.
Benefits: Immediate financial relief to prevent further debt or financial instability.
More Information: Visit the Alberta Works website for eligibility requirements and application details.
