Over the past twelve months, many Canadians have begun struggling with their finances. Credit card balances and delinquencies are starting to increase. If you’re struggling with debt and aren’t sure where to turn, this article will discuss some strategies to get out of debt faster.

Before you take any action, I recommend consulting a professional debt settlement expert before exploring the following options. You’ll find a list of some of my preferred partners below.

Negotiating With Creditors to Get Out of Debt Faster

If you feel your financial situation is getting out of hand, it may be time to negotiate with your creditors. There are several solutions open to you to help you get out of debt faster by making deals with credit card and loan companies. 

Two women standing in front of a table negotiating over a document

Dealing with Creditors Yourself

Did you know that most credit companies want to help you stay current on your bills? One of the first pieces of advice I give anyone struggling to pay their debts is negotiate directly with the creditor. This option is often the cheapest solution and can sometimes avoid negative impacts on your credit.

There are typically three options when it comes to dealing with creditors yourself:

  • Move a payment date back a few days to help you make payments on time
  • Restructuring the loan over a longer amortization period to lower payments
  • Forgive some of the debt for a one-time payment of the remaining balance

If you are only going to be a few days late on your payment, the simplest solution is to call the lender and let them know you can’t make your payment. Sometimes the lender is willing to move your payment by a few days, which avoids harming your credit.

Restructuring your loan over a longer amortization period means increasing the time to pay off the loan. The effect is that your payment is lower, yet you will likely pay more interest over time. Since you are not missing payments and not defaulting on your debt, this solution doesn’t harm your credit. 

Some lenders may allow you to have a part of your debt forgiven if you make a single lump sum payment, usually between 70% and 90% of your balance. But, you must have the funds to make the full payment immediately. Also, you will harm your credit for a couple of years as the lender will declare the settlement on your report.

Informal Proposal

If you cannot negotiate with your creditors directly, the next best solution is an informal proposal. This process is where a lawyer or trustee negotiates on your behalf to reduce the amount you owe to the lender. You must make a one-time payment, but some lenders may allow a series of payments to pay the debt in full.

This solution can result in only paying back 25% – 75% of your original balance. Yet, the drawback here is that you will likely have a negative impact on your credit report that stays on your bureau for several years.

Consumer Proposal

A consumer credit proposal is a process managed by a bankruptcy trustee. During this process, the trustee negotiates with all your creditors at once. Once the creditors come to an agreement, it is legally binding, and they must agree to stop all collection efforts at once. No further interest will accrue to your debt.

The consumer proposal will consist of regular payments over several years. Though, if you have the funds (such as through a refinance or second mortgage), you can pay a lump sum. A consumer proposal will have a negative impact your credit report and stay on your bureau for two years after your final payment.

Woman holding head in hands looking very stressed out


A bankruptcy is a formal legal proceeding through the courts which settles debts with your creditors. In this process, a licensed insolvency negotiates through the courts to reach a settlement with your creditors. This agreement is binding, so you and your creditors must abide by the terms. 

In a bankruptcy, you assign your assets to a trustee pay out what liabilities you can. Once the bankruptcy is complete, your obligations are gone and you can move forward with your life. Although bankruptcy helps clear your debts, the impact on your credit report is devastating. Your score will take a large hit since the bankruptcy will remain on your record for a period of seven years. 

Consolidation Loans to Get Out of Debt Faster

One of the most effective ways to get out of debt faster is to combine high-interest credit cards and other obligations into a single payment. The reason that this method helps you get out of debt faster is the structure of a loan versus a credit card. 

Credit card payments consist mainly of interest. On a credit card with a $5,000 balance at 12.99%, it will take over 14 years to pay off the balance making the minimum monthly payment! 

But with a loan, the balance is amortized. Amortizing means that the loan is calculated over a set period of time. Most consolidation loans amortize over 5 or 10 years, helping you to get out of debt faster. 

Do Nothing and Refuse to Pay Your Debts

While this is the worst financial advice I can give you, it can be very difficult for creditors to collect a debt from you. Additionally, the cost of taking you to court to register a judgment may exceed the benefit to a lender. 

Normally, lenders will sell your debt to collection agencies for a fraction of what you owe. As these companies call you over and over to collect what you owe, they also sell it off to another collections company at a discount. And so on….

The result is that you still owe money to creditors, and you’re unable to get new credit before fixing this issue. Yet, if you’re in a situation where you cannot afford the payments on the other options, this may be the best short-term solution.

First Steps to Getting Out of Debt

If you’re serious about paying off what you owe, the first step is to contact a professional. It is challenging to get out of debt yourself – the author can tell you this from first-hand experience. Contact a local insolvency professional to learn about the options available to you. If you don’t know where to turn, I recommend the people below:

Southwestern Ontario

Bethany Stuive – Licensed Insolvency Trustee, MNPContact via Email

Toronto & GTA Central

Zach Brull – Debt Relief Specialist, 4 PillarsContact via Email

GTA East

Rebecca Sudano – Licensed Insolvency Trustee, BDOContact via Email


Jennifer Croft – Co-Founder Credit LiftContact via Email


About the Author

The column's goal is to level up your financial knowledge and help you avoid common pitfalls and mistakes along the way. Although money management sometimes seems like an intricate task, it doesn't have to be. The advice here is common sense and simple to follow. The first step to a better financial future starts here, and it's never too late to begin. Adam Stapley is a Mortgage Broker with Pineapple Financial and author of the personal finance Newsfeed CanadianFinanceGuide.ca. He is intensely passionate about helping Canadians build wealth through the power of real estate. Many of the articles in this column come from Adam's experience assisting Canadians to understand and shape their personal finances. Pineapple Financial Lic #12830 CanadianFinanceGuide.ca adam@canadianfinanceguide.ca