Debt Help


What is Debt Forgiveness?

In this guide we’ll explore debt forgiveness, from what it is and which debt relief programs offer forgiveness, to how you know when your debt has been forgiven.


What is debt forgiveness?

Debt forgiveness is an agreement between a creditor and debtor to cancel the obligation of a debt without receiving any payment from the borrower.

In Canada, many creditors will agree to write off your debt if you are unable to make your debt payments.

If, for example, your financial situation is so precarious that you are unable to make even the minimum payments on a credit card debt, the credit card company may decide they would be better off writing off your remaining balance as a loss rather than chasing you for debts you can’t afford.

Write off up to 80% of your unaffordable debt – Check if you qualify!

What debt forgiveness programs are available in Canada?

There are certain debt relief programs available in Canada that allow you to write off a portion of your debts, while others make it easier for you to repay what you owe in full.

We’ve detailed some of the most popular options below.

Consumer proposal

Consumer proposals are formal, legally-binding agreements between you and your creditors.

You can propose to pay off your debt within five years by making a regular monthly payment until the debt has been settled.

A Consumer Proposal can reduce your overall debt, in many cases by as much as 75%.

As long as you stick to the terms of the agreement, any debt remaining beyond your repayment term will be forgiven.

Debt Management Plan

A Debt Management Plan will provide debt relief, but does not technically qualify as forgiveness program.

With a DMP, you will likely be expected to repay the full amount you owe.

You will propose a payment plan to creditors that will allow you to clear your debt through a series of monthly payments – usually credit card debt or other common forms of unsecured debt.

The length of your plan will depend on how much your can afford to repay each month.

While it’s unlikely your creditors will agree to a level of debt forgiveness as part of your DMP, it’s not impossible. I

t’s also common for creditors to agree to freeze interest and charges on your debt, which can help you with repayment.

Direct consolidation loan

Similarly to the DMP, a consolidation loan is not strictly a loan forgiveness program but it can be a useful way of managing your debts and ensuring you don’t default on repayments.

Instead of juggling multiple repayments to different creditors, you take out one overarching loan which you repay via a single monthly payment.

That money is then distributed amongst all your creditors, streamlining the debt repayment process.

Debt settlement

Another option for those who are struggling to repay their debts. Instead of paying everything at once, you agree with your lender to pay less than what you actually owe so that the balance is settled.

This is often done when people have mounting collections on credit cards or medical bills which difficult to manage amidst unemployment or other financial crisis.


Bankruptcy can be an effective way for debtors to clear out their debt and get a fresh financial start.

After you’ve lived under certain restrictions for a period of between 9 and 21 months, you will be discharged from your bankruptcy and free of the debts included in the arrangement.

If your financial situation is chronic, bankruptcy may help you in the long run, however it can have long-term consequences on your credit score and future ability to borrow money.

It also doesn’t erase all kinds of debt automatically – in certain circumstances, student loans can’t be included in a bankruptcy, for example.

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When does a debt become forgiven?

Debt forgiveness can be automatic (such as in cases of bankruptcy), or voluntary (when the creditor decides it’s no longer worthwhile to collect on the account).

If you have entered into an official debt relief program that includes debt forgiveness, it’s easier to put a timeline on things:

  • Consumer proposal: Your debt will be written off as soon as you complete your payment term, which can be anywhere between 1 and 5 years.
  • Bankruptcy: If it’s your first bankruptcy, your debt will be forgiven after 9 months unless you have to pay surplus income, in which case it could take as long as 21 months.
If you’re not part of a payment program that involves debt forgiveness, then there is no specific formula for how long it will take for your debt to be forgiven – whether your debt is written off, and how long that takes, will depend on your financial circumstances and your relationship with your creditors.

How do I know if my debt has been forgiven?

It can be difficult to find out whether your debt has been forgiven by a creditor unless you make a concerted effort towards this goal.

Even if a creditor or lender agrees that you don’t have to pay back some or all of your loan, they may not actually follow through with this promise.

If your debt has been forgiven, you may receive an official notice from your lender or creditor explaining that you no longer owe the money they were trying to collect.

You should also check your credit report and contact agencies such as Equifax and Transunion to ensure that they have updated your account as a write-off.

To know for sure whether or not you have any remaining debt obligations, it’s important to continue making monthly payments until the last account has been officially closed.

What if creditors are still contacting me over a debt that’s been forgiven?

If you remain concerned about whether or not a payment has been forgiven, you can request a letter from the creditor explaining that no more payments are necessary.

If this doesn’t appear to work, continue sending letters every few months as some lenders may take as much as six weeks to process them before showing this information on your credit report.

Some creditors will agree to send letters for requesting no further contact from collection agencies if you explain that it’s causing stress and anxiety in your life.

If you believe there is still an issue with an unpaid debt, consider filing a complaint with the CFPB (Consumer Financial Protection Bureau).

Here’s an example of how we can help

Let’s say you owe…

CRA Debt


Canadian Tire Card


TD Bank Overdraft


Utilities Arrears


CashMoney Loan


Student Debt


Total amount owed:


Repayments reduced by 88%

* monthly payments are based on individual financial circumstances

Can student loan debt be forgiven in Canada?

In order to fund their education, many students in Canada apply to the federal government for a student loan.

This helps them cover the costs associated with going to school, but has to be repaid eventually.

Student loan forgiveness is available in certain circumstances, but it is treated slightly differently than regular debt forgiveness.

Federal student loans and the seven year rule

Because student loans are effectively a federal loan, having your student loans forgiven isn’t as simple as entering a debt relief program that will allow you to write off your debts.

A consumer proposal covers most types of unsecured debts, but there is a seven year rule for student loans.

Only if you have been a graduate for at least seven years can you include student loan debt in your consumer proposal, otherwise you will remain responsible for repayment.

It’s a similar story with bankruptcy in Canada. While it is possible to declare bankruptcy and be freed from responsibility for your student loans, at least seven years must have passed since your graduation for your student loans to be eligible for forgiveness.

Where can I find debt advice and more information on debt forgiveness?

If you find yourself struggling to repay a debt, it can leave you feeling stressed and worried about your long-term financial security.

Debt forgiveness may be an option for you, but how do you know if your situation qualifies?

We can help. At A Fisher & Associates, we specialize in debt relief solutions that allow people to pay off the debt they can afford, and write off the debt they can’t.

If you’re interested in a payment plan that includes debt forgiveness, or you’re just looking for some sound financial advice, get in touch with us today on 416-842-0040.

Write off up to 80% of your unaffordable debt

We’ve helped thousands of people, just like you, write off unsecured debt they can’t afford and enjoy a life free of pressure from the people they owe money to. 

If you’re looking for help, or you’re worried about your ability to repay the debt you owe, A. Fisher & Associates is here to support you.

For free advice and guidance tailored to your financial situation, you can talk to one of our debt experts today. Give us a call for free on 416-842-0040


Frequently Asked Questions

We’ll ask you about your income and outgoings, as well as who you owe money to, so that we can get the full picture, and give you the best possible advice to find a solution that’ll save you money, and make life much easier!

It’s okay, we can still help. If you’re not sure of all the people you owe money to, or you haven’t got an exact amount for each payment, we can discuss this, or suggest steps you can take to get us the information while you’re on the call.

You won’t pay anything for the advice our debt specialists give you on the call. If you do qualify for a debt solution, the fees will be taken from the monthly amount you pay to your creditors. Everything’s covered, and we don’t take any money upfront. The last thing we want is you getting further into debt.
Our advisors will take it step by step, so we can understand your concerns, and which of the available solutions would be the right fit for your situation. We’ll only proceed if you’re completely comfortable to go ahead.
That’s completely understandable, but be reassured, we’ll do everything we can to put you at ease. We don’t use complicated jargon, and we treat every customer as an individual, taking their unique circumstances into consideration before sharing our impartial advice. There’s nothing we haven’t dealt with; we speak with hundreds of customers every single day. We’re here to have an open and honest chat and try to build a picture to see what help and support we can give you.

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Fill out the form and arrange a call back with one of our debt advisors.

We will then run through all of the options available to you and advise you on which is the best option for you

We will then help you put the debt solution in place that will help you get back on track

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