Government Debt Relief Program Canada: What Exists and How to Apply 2026
The government debt relief program in Canada is the set of federally legislated options under the Bankruptcy and Insolvency Act: consumer proposals, bankruptcy, and court-ordered consolidation orders, all created by federal law and overseen by the Office of the Superintendent of Bankruptcy. Canadians carrying more than $5000 in unsecured debt can apply, and checking which option fits is free.
- Free to check, no obligation, no impact on your credit score
- For Canadians with more than $5000 in unsecured debt
- Covers credit cards, lines of credit, store cards and unpaid bills
What Is the Government Debt Relief Program in Canada?
The government debt relief program in Canada is not a cash payout or a grant, it is a legal framework: the Bankruptcy and Insolvency Act (BIA) gives insolvent Canadians the right to reduce, restructure or discharge unsecured debt through a process the federal government regulates and supervises. When people search for a government program to help with debt, this framework is the thing that actually exists.
Three parts of the framework matter to an individual. The consumer proposal lets you repay a portion of what you owe and have the rest legally forgiven. Bankruptcy discharges most unsecured debts outright. Consolidation orders, available in four provinces, let a court restructure your payments into one affordable amount. Each is filed through a Licensed Insolvency Trustee or the court, never through a private company.
The Office of the Superintendent of Bankruptcy (OSB) licenses every trustee, sets the fee tariff, keeps the public record of filings and investigates complaints. That federal oversight is what separates the real program from the private offers that borrow its name. If you have been searching for grants specifically, our guide to debt relief grants in Canada explains what is and is not on offer.
Which Government Debt Relief Program Options Exist?
Four options make up the government debt relief program for individuals in Canada: the consumer proposal, bankruptcy, the consolidation order under Part X of the BIA, and Quebec's voluntary deposit scheme, with non-profit credit counselling sitting alongside them as a regulated but non-government route. The table below shows how each one is created, who administers it, and what happens to the balance.
| Government debt relief program option | Legal basis | Administered by | Is the balance reduced? | Usual length |
|---|---|---|---|---|
| Consumer proposal | Bankruptcy and Insolvency Act, Division II | Licensed Insolvency Trustee | Yes, you repay a portion and the rest is forgiven | Up to 60 months |
| Bankruptcy | Bankruptcy and Insolvency Act | Licensed Insolvency Trustee | Yes, most unsecured debts are discharged | 9 or 21 months for a first bankruptcy |
| Consolidation order (Orderly Payment of Debts) | Bankruptcy and Insolvency Act, Part X | Provincial court in Alberta, Saskatchewan, Nova Scotia and Prince Edward Island | No, but the court sets one affordable payment and stops collection | Up to 3 years |
| Voluntary deposit (Quebec) | Quebec Code of Civil Procedure | Court clerk | No, a set share of your pay is deposited and shared among creditors | Until the debts are paid |
| Debt management plan | No statute, voluntary agreement | Non-profit credit counselling agency | No, but interest is usually reduced or stopped | Up to 5 years |
The two options most Canadians end up using are the consumer proposal and bankruptcy, because they are the only ones that reduce the balance itself. The homepage covers the whole ladder, including consolidation loans.
Who Qualifies for the Government Debt Relief Program?
You qualify for the government debt relief program if you are insolvent, meaning you owe at least $1000, cannot pay your debts as they come due, and live, work or own property in Canada; in practice, the options become worthwhile above $5000 in unsecured debt. There is no credit score requirement and no maximum age.
Each option adds its own conditions. A consumer proposal is available when your unsecured debts total $250000 or less, not counting a mortgage on your principal residence. Bankruptcy has no upper limit. Consolidation orders require you to live in one of the four provinces that offer them, and voluntary deposit is for Quebec residents only.
| Requirement | Consumer proposal | Bankruptcy |
|---|---|---|
| Minimum debt | $1000, practical floor about $5000 | $1000, practical floor about $5000 |
| Maximum unsecured debt | $250000 (mortgage on your home excluded) | No maximum |
| Must be insolvent | Yes | Yes |
| Credit score needed | None | None |
| Assets protected | All, you keep everything | Only those covered by provincial exemptions |
The debts covered are unsecured: credit cards, lines of credit, store cards, unsecured personal loans, overdue utility bills and most tax debt. A mortgage or a financed vehicle stays outside the program because the lender holds the asset. Some obligations survive even bankruptcy, including court fines, child support and student loans less than 7 years old, so a trustee will always ask what kind of debt you carry before recommending a route.
Check if you qualify, freeHow Does a Consumer Proposal Work as a Government Debt Relief Program?
A consumer proposal works by having a Licensed Insolvency Trustee file a legally binding offer to your unsecured creditors to repay a portion of what you owe, usually as one fixed monthly payment over up to 60 months, after which the remaining balance is forgiven. It is the most used part of the government debt relief program because it reduces debt while you keep your home, vehicle and savings.
The moment the proposal is filed, a stay of proceedings takes effect. Collection calls stop, lawsuits freeze and wage garnishments for included debts end. Interest stops accruing on the included debts as well. Creditors then have 45 days to vote, and if creditors holding the majority of your debt by dollar value accept, every unsecured creditor is bound by the deal.
| Consumer proposal illustration | Amount |
|---|---|
| Unsecured debt owed | $25000 |
| Proposal offered to creditors | $10000 |
| Term | 60 months |
| Monthly payment | About $167 |
| Balance forgiven on completion | $15000 |
The figures above are an illustration only. The amount a trustee proposes depends on your budget, your assets and what creditors would receive in a bankruptcy, so two people owing $25000 can file very different proposals. Read more about proposal reductions in our guide to debt forgiveness in Canada, or see the consumer proposal overview on the homepage.
How Does Bankruptcy Work Under the Government Debt Relief Program?
Bankruptcy works by assigning your non-exempt assets to a Licensed Insolvency Trustee, who administers them for creditors, in exchange for a legal discharge of most unsecured debts, with a first bankruptcy typically ending after 9 months, or 21 months if your household earnings are above the federal surplus threshold. It is the deepest relief the program offers and the right tool when even a reduced proposal payment is out of reach.
The stay of proceedings applies exactly as it does in a proposal: collections, lawsuits and garnishments on included debts stop on the day of filing. During the bankruptcy you make monthly payments toward the trustee's fee and any surplus obligation, attend two counselling sessions, and report your monthly budget to the trustee. Most first-time filers with no surplus and no assets above the exemption limits are discharged automatically at 9 months.
What you keep is decided by provincial exemption law rather than federal law. Every province protects basic household goods, clothing, tools of your trade and, in most cases, a vehicle up to a set value; some also protect a portion of home equity. The trade for the deeper relief is a credit note lasting 6 to 7 years after discharge for a first bankruptcy, compared with up to 3 years after completing a proposal. The bankruptcy section of the homepage walks through the asset rules in more detail.
What Are Consolidation Orders and Voluntary Deposit?
Consolidation orders and voluntary deposit are the provincial arms of the government debt relief program: a consolidation order under Part X of the BIA, often called Orderly Payment of Debts, lets a court in Alberta, Saskatchewan, Nova Scotia or Prince Edward Island combine your unsecured debts into one court-set payment over up to 3 years, while Quebec's voluntary deposit lets you pay a set share of your pay to the court clerk, who distributes it to creditors. Neither reduces the principal, but both stop collection and lawsuits while you pay.
These options fit people who can repay everything if the interest clock stops and the calls stop, and who live in a province that offers them. Few people hear of them until a counsellor or trustee raises them. Outside those provinces, a debt management plan through a non-profit credit counselling agency plays a similar role, as the credit counselling section on the homepage explains.
How to Apply for the Government Debt Relief Program: Step by Step
Applying for the government debt relief program takes six steps: list your debts, check your options, meet a Licensed Insolvency Trustee for a free consultation, choose a route, sign the filing documents, and let the trustee file with the Office of the Superintendent of Bankruptcy. Nothing is binding until you sign, and the first three steps cost nothing.
- List every debt. Pull your credit reports from Equifax and TransUnion, add any accounts that have gone to collections, and note which debts are secured.
- Check your options. The free check on this page takes a few minutes, asks for rough totals and a monthly budget, and connects you with a licensed professional. It does not affect your credit score.
- Attend the consultation. A trustee is required by law to explain every alternative, including options that pay them nothing. Bring your debt list, recent bank statements, and a list of what you own.
- Choose the route. With the real numbers on the table, you decide between a proposal, bankruptcy, a provincial option or a counselling plan. Nobody should rush you.
- Sign the documents. The trustee prepares the statement of affairs and, for a proposal, the offer to creditors. You review and sign, usually electronically.
- Filing and the stay. The trustee files electronically with the OSB. From that day the stay of proceedings protects you, and your creditors are notified by the trustee, not by you.
How Long Does the Government Debt Relief Program Take?
The government debt relief program takes days to start and months to years to complete: a consultation typically happens within a week of your first enquiry, a filing can follow within days of your decision, the stay of proceedings begins the day of filing, and the program itself then runs 9 to 21 months for a first bankruptcy or up to 60 months for a consumer proposal.
| Stage of the government debt relief program | Typical timing |
|---|---|
| Free option check on this site | A few minutes |
| First consultation with a trustee or counsellor | Usually within 1 to 7 days |
| Filing after you decide | Often within a few days |
| Stay of proceedings (calls and garnishments stop) | The day of filing |
| Creditor vote on a consumer proposal | 45 days after filing |
| Consumer proposal payments | Up to 60 months, shorter if you pay it off early |
| First bankruptcy to discharge | 9 months, or 21 months with surplus payments |
| Credit note after a proposal | Up to 3 years after the final payment |
| Credit note after a first bankruptcy | 6 to 7 years after discharge |
The change people notice first is not the end date, it is day one: the phone goes quiet, garnishments stop with the next payroll run, and there is a single number to pay instead of a stack of statements. Trustees work business hours, so a consultation booked on a Friday afternoon usually happens the following week rather than the same day.
What Does the Government Debt Relief Program Cost?
The government debt relief program costs nothing to explore and, once filed, the trustee's fees are set by a federal tariff and paid out of the money you already contribute to the proposal or bankruptcy rather than on top of it. Checking your options here is free, consultations with Licensed Insolvency Trustees are free, and non-profit credit counselling agencies offer free first sessions.
In a consumer proposal, the trustee's fee is deducted from the payments you make, so the monthly amount you agree to is the whole cost. In a bankruptcy, the fee is covered by your monthly payments and any assets or surplus payments that flow to the estate. Consolidation orders and voluntary deposit involve small administrative costs handled inside the court process rather than billed separately.
The costs to watch for are the ones the real program never charges: upfront fees to "get you into" a government program, monthly membership fees to a private company, or a charge for a consultation. The Financial Consumer Agency of Canada publishes free guidance on fees and on choosing a debt professional.
How to Tell the Real Government Debt Relief Program From Imitations
The real government debt relief program is recognizable by three facts: it is filed only by a Licensed Insolvency Trustee or a court, the trustee's name appears in the public OSB directory, and nobody asks for money before the free consultation. Any company that describes itself as a "government approved" or "government registered" relief provider without being a trustee is selling something else.
The OSB keeps a searchable directory of every licensed trustee in Canada, and the Bankruptcy and Insolvency Act itself is public. Two questions settle most doubts: who exactly will file my documents, and what is their licence? A legitimate answer names a trustee and a firm. An evasive answer is your cue to leave. The homepage's guide to spotting a debt relief scam lists the other common tells, including the outfits that promise guaranteed results, which no honest professional ever does.
The free check below sorts your numbers against every option and connects you with the right kind of licensed professional for your province.
Start your free option checkGovernment Debt Relief Program FAQ
Is there a government debt relief program that pays off my debt?
No. The Canadian government does not pay consumer debts or issue debt relief cheques. What it provides is the legal framework in the Bankruptcy and Insolvency Act that lets you reduce or discharge debt through a Licensed Insolvency Trustee, with collection activity stopped by law while you do it.
Does the government debt relief program cover CRA tax debt?
Yes, in most cases. Personal tax, GST and HST balances are unsecured debts and are included in consumer proposals and bankruptcies unless the Canada Revenue Agency has already registered a lien against property. Our guide to CRA debt forgiveness covers tax debt in detail.
Can I apply for the government debt relief program online?
You can start online. The option check on this page and the first conversation with a trustee are usually done by phone or video, and most trustees now accept electronic signatures on the filing documents. The trustee files with the OSB electronically, so many people complete the whole process without visiting an office.
Will my employer find out?
Not from the program itself. A consumer proposal or bankruptcy is a public record with the OSB, but employers are not notified unless a wage garnishment is already in place, in which case the trustee sends the stay of proceedings to your payroll department to stop it.
What happens if I miss payments in a consumer proposal?
A consumer proposal is annulled automatically if you fall 3 months behind on payments. The debts return to their original balance, less what you paid, and creditors regain their rights. Trustees can amend a proposal if your situation changes, so the rule is to call them before missing a payment, not after.
Can I use the government debt relief program more than once?
Yes, but the terms get tougher. A second bankruptcy lasts 24 months without surplus payments, or 36 months with them, and the credit note lasts longer. There is no legal limit on consumer proposals, though a trustee will look closely at why the first one did not hold before filing another.