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An Overview of Canadian Federal Debt Relief Programs

Written by Jessica Steer
Having some form of debt can work in your favour. You need a variety of credit lines in order to increase and maintain your credit score. That said, it can be easy for that debt to get out of control.
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    While it may seem impossible at this point to get out of debt, there are options to help you manage those debt problems.

    The key to figuring out how to manage that overwhelming debt is by breaking down what that debt is for. For some forms of debt, you may be able to get some help from the Canadian government. For other forms of debt, there are government agencies that can help you manage your debt and restructure your financial situation.

    Canadian Government Grants

    Unfortunately, while there are some forms of government programs to help with debt, there are no Canada debt relief grants. Just because this isn't an option doesn't mean there isn't hope. The government debt relief programs available help you to manage your debt while creating financial stability and maintaining a manageable lifestyle.

    Federal Debt Relief Programs

    If you're looking to free up your finances and take control of your debt, there are many different federal programs and debt relief services that can help. These services come in the form of debt settlement companies. No matter which debt settlement company you choose, they help you to find the best debt repayment programs that fit your needs with their free debt advice.

    Debt Relief Solutions Pros Cons
    Credit Counseling With credit counselling, you work with a licensed insolvency trustee (credit counsellor) to create a debt management plan and lower your payments. Credit counselling can have a negative impact on your credit report.
    Consumer Proposal Licensed insolvency trustees work with creditors to reduce debt and create reasonable payments. They can decrease your debt by up to 80% with their debt management plans. Consumer proposals also have a negative effect on your credit score.
    Bankruptcy Filing bankruptcy allows you to write off unmanageable debt for non-exempt assets. The exact guidelines are in the Bankruptcy and Insolvency Act of Canada. Bankruptcy stays on your credit report for up to 6 years after completion the first time. After that, it stays on for 14 years, and your first bankruptcy will show on your credit report again.

    With any of these different debt relief options, there are some positives and negatives. The main negative is the effect it has on your credit score. Each one has a different impact, and they will show up in a negative capacity—the only way to combat this negativity on your credit report. That said, they allow you to control your debt and realign your finances.

    If you don't think these debt solutions could work for you, then debt consolidation is another option.

    Debt Consolidation

    Debt consolidation essentially means taking out a new loan to pay off all of your other debts. While the amount of debt you owe will stay the same, you'll save money by combining all of your interest payments into one. Ideally, you'll get a lower interest rate than you currently have.

    The idea behind a debt consolidation loan is to combine all of your debts into one affordable monthly payment. This makes your debt more manageable and much easier to pay off. For many, this is the right debt relief solution.

    Provincial Debt Relief Programs

    The above options to manage your debt can be utilized no matter where you live. That said, some provincial programs may help you manage your debt repayment. There are also some debt forgiveness programs that will get rid of some of your debt if you're eligible.


    If you live in British Columbia, you could be eligible for loan forgiveness on your student loans. There are some stipulations you must meet to be approved, though.

    • You have to work in an underserved community in a publicly funded facility
    • You must work in an occupation that has a shortage and involves working with children
    • You need to be in repayment of an outstanding BC student loan but still be in good standing
    • You had to have graduated from an accredited post-secondary institution
    • You can't be enrolled in full-time studies at a post-secondary institution
    • You must work a minimum number of in-person hours

    The occupations that qualify for this are:

    • Nurse
    • Physician
    • Midwife
    • Medical Laboratory Technician
    • Diagnostic Medical Sonographer
    • Speech Language Pathologist
    • Audiologist
    • Occupational Therapist
    • Physiotherapist
    • Respiratory Therapist
    • Polysomnographer
    • School Psychologist
    • Technology Educator
    • Teacher for those who are deaf/ hard of hearing or visually impaired

    If you're looking to apply for this program, you can do so through Student Aid BC. They have step-by-step instructions on how to apply. Once you're approved, you can qualify for up to 20% loan forgiveness. The amount you're approved for is based on how many in-person hours you've worked.


    Alberta also offers a program for those who need help to make payments on their student loan debt. This program is called RAP, also known as the Repayment Assistance Plan. In order to be eligible, you must meet the following conditions:

    • Be currently repaying an Alberta or Canada student loan
    • Be in good standing on your loan
    • Be struggling to keep up with your loan repayments

    Once you've been approved, the RAP program has two stages.

    Stage 1

    If you're approved for stage 1, it can last up to a total of 5 years. However, you're only eligible within 10 years of leaving school. With this stage, you can get your monthly payments reduced, and the government pays the interest on your loan.

    Stage 2

    This stage is intended for those who have already been on RAP for 5 years or have been out of school for more than 10 years. Unlike stage 1, which is meant for short-term relief, stage 2 is there to provide long-term relief for those who need it. With this stage, your monthly payments are reduced, and the government pays the principal as well as the interest.


    In Saskatchewan, loan forgiveness is offered to nurses, nurse practitioners, veterinarians and veterinary technicians. They offer this to encourage people to work in more remote areas.

    If you're approved, you can receive up to $4,000 for every year for up to 5 years, for a total of $20,000. It also has to be a Saskatchewan student loan. There are some other stipulations that apply, but overall, as long as you're working in one of the professions listed above and have a student loan, you can apply.


    If you need some help paying off your student loans in Ontario, they have a program called OSAP. This plan offers different options to help bring your defaulted student loan back into good standing. These plans range from 2 to 6 months and will include any outstanding interest you owe.

    The requirements for approval into the OSAP program are:

    • You must have defaulted on an Ontario or Ontario/Canada student loans
    • You owe at least $600 of principal amount outstanding
    • You've attempted to rehabilitate your student loan less than twice

    Once you've gotten approved, you need to keep up with your pre-arranged payments. Once you've completed the program, your loan will be rehabilitated. You'll then be able to apply for RAP (Repayment Assistance Program), which will help you manage your payments.

    In order to apply, you must contact the collection agency that has your student loan and let them know you want to apply for the program. They'll let you know if you qualify and where to go from there. If you don't know which collection agency your loan was given to, you can contact the collections branch at the Ministry of Finance.


    If you live in PEI and have student loans, they offer a Debt Reduction Grant Program. It's meant to help those who have PEI student loans cover the cost while continuing to work in their community. In order to be eligible for this program, you must:

    • Have borrowed for the PEI student loan program
    • Have graduated from a post-secondary school in the last 3 years
    • Reside in PEI and have done so for at least 6 months
    • Have amounts owing of at least $100 or more

    The amount you're approved for will depend on the program you attended and how long you were in school for. The grant will cover partial amounts of the standard length of the program plus one year.

    Nova Scotia

    Instead of offering grants, Nova Scotia offers the Student Loan Forgiveness Program. With this program, you can potentially have all of your student loans forgiven. In order to qualify, there are some requirements you must meet.

    • Must have Nova Scotia Student Loans
    • Your degree must be completed within 8 years of beginning
    • It must be your first eligible undergraduate degree
    • You must graduate from the eligible degree or program at a Nova Scotia university

    The biggest factor in determining how much loan forgiveness you could get approved for depends on your graduation date. It also depends on whether you exceeded the 5-year maximum or not. If you did, then your first 5 years will be the only ones covered.


    Quebec offers a reduction on your student loans with the Loan Reduction Program. You can save up to 15% on your loan if you meet all the qualifications.

    In order to be eligible, you must have been approved for a bursary through the Loans and Bursaries Program for each year you were studying. If you attended school for technical training or university, you must have completed the program within the given deadline.

    In order to apply, you must submit your application directly to the Loan Remissions Program. You have three years from the date your program is completed to apply. Once you've been approved, the money will be paid directly to your student loan.

    Emergency Debt Relief

    While you may have heard of the Canadian Emergency Debt Relief Program, it doesn't exist. It's something that was used in a marketing campaign for a debt relief company that circulated on social media for a while. It gave the impression that it was a government program when it wasn't.

    Credit Card Debt Forgiveness

    With credit card debt, there are different ways that your debt can be forgiven. One way to have it written off is through consumer proposals. This comes in the form of your trustee making deals in order to create manageable debt management programs.

    Your credit card debt can also be forgiven through collections agencies. Normally, they'll request you pay the full amount. That said, they want to get as much money back as possible. Because of this, you can often negotiate your debt payments and reduce your debt by making a smaller lump sum payment. This isn't just for credit cards; you can do this for other forms of unsecured debt as well, such as:

    • Payday loans
    • Personal loans
    • Lines of credit


    The biggest factor in determining how to pay off debt is what kinds of debts you hold. As you can see, many provinces have ways to help you pay off your student loan and even forgive parts or all of those debts. If your debt isn't in the form of a student loan, then the next step would be to see if you qualify for debt consolidation loans. Once you're approved for that, you can turn multiple debts into one monthly payment, making debt payments more manageable.

    If that doesn't work, plenty of different programs are available to help you get your finances back on track. There is hope whether you choose to go with a credit counselling agency or proceed with the bankruptcy process. Unfortunately, there are no government grants or forms of government debt relief options to help you manage this stressful situation and become debt-free.

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