A Long-Term Comparison of Consumer Debt Relief Options in Canada


Jodi Letkiewicz, Patricia White, and Ellan Dickieson


Credit Counselling Canada




Consumer Debt in Canada has reached near record levels, according to a report published by the Organization for Economic Cooperation and Development (OECD). However, debt management programs may offer a path to financial stability for many Canadians. The primary objective of this study is to compare the long-term financial outcomes of Canadians who use debt management, bankruptcy, and consumer proposals to obtain relief from debt. It is believed that this study will help credit counsellors understand how to better assist their clients, inform policy makers about how well each program is functioning, and inform lenders about which consumers will be more likely to manage their credit. To investigate this issue, not-for-profit credit counselling agencies obtained data from a consenting sample group of 336 successful debt management clients, and compared them with a control group of similar Canadians who completed either declared bankruptcy, completed a consumer proposal, or chose to do nothing.

The results of this study were decidedly mixed, showing that many Canadians are able to improve their situation through debt management proposals, while many others are not. On the one hand, findings show decreases in late payments, and overall lower monthly payments. On the other hand, the findings also show that consumers do not seem to be achieving relief from their debt in the long-term. Some debt relief programs are more effective than others, and consumer outcomes can vary accordingly.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.

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Source: Consumer Policy Research Database

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