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View optionDebt Consolidation in Canada
Debt consolidation combines multiple debts into one payment, ideally at a lower interest rate. In Canada, the right option depends on how much you owe, your credit and whether you can qualify for new credit.
What debt consolidation are
Debt consolidation is a strategy, not a single product. You might use a consolidation loan, a balance-transfer credit card, a home equity line of credit, a consumer proposal or credit counselling. Each has different costs, credit consequences and eligibility rules.
Eligibility
- You have multiple debts you want to combine into one payment
- You can qualify for the consolidation product you choose
- For a consumer proposal, you must be insolvent and work with a Licensed Insolvency Trustee
- For a home equity option, you need sufficient equity in your property
How it works
- List every debt with its balance, interest rate and minimum payment
- Compare the total cost of each consolidation route, not just the new payment
- Check whether the new rate is genuinely lower than your current weighted average
- Understand the credit impact — a consumer proposal stays on your report for years
- Avoid consolidating unsecured debt into secured debt without understanding the risk
What to watch for
- Consolidating does not reduce your debt — it changes the structure and cost
- Turning unsecured debt into secured debt puts your home or vehicle at risk
- A consumer proposal and bankruptcy are formal insolvency proceedings with lasting credit effects
- Non-profit credit counselling is often free or low-cost — compare it before paying for a service
Frequently asked questions
Does debt consolidation hurt my credit score?
A new consolidation loan involves a credit inquiry and can lower your score slightly at first. A consumer proposal or bankruptcy has a much larger and longer-lasting impact.
Is a consolidation loan better than a consumer proposal?
It depends on your situation. A consolidation loan repays your debts in full at a lower rate, while a consumer proposal settles them for less but has a serious credit impact. A Licensed Insolvency Trustee can explain the trade-offs.
Can I consolidate debt without owning a home?
Yes. Unsecured consolidation loans and balance-transfer cards do not require property. Home equity options are only available to homeowners.
Where can I get free help with debt in Canada?
Non-profit credit counselling services and Licensed Insolvency Trustees provide assessments. Be cautious of companies that charge large upfront fees before providing any service.
Related tools and guides
Find debt consolidation by province
Important legal information
Promissory.ca is not a lender, bank, mortgage broker or credit counsellor. We do not make lending decisions and we do not charge you a fee to use this service.
Submitting an application does not guarantee approval. All applications, rates and terms are set and approved solely by the individual lender or licensed professional.
Rates, fees and loan amounts vary by lender, province, loan type and your credit profile. Advertised rates are the lender's lowest offered rate and may not be available to you.
Lenders may perform a credit check with one or more credit bureaus, including Equifax and TransUnion. A hard credit inquiry may affect your credit score.
There is no obligation to accept any offer presented to you. Review every agreement carefully before signing.
Borrow only what you can reasonably afford to repay. Late or missed payments may result in additional fees, collection activity and negative credit reporting.
We handle personal information in accordance with the Personal Information Protection and Electronic Documents Act (PIPEDA). See our Privacy Policy for how we collect, use and protect your information.
If you are struggling with debt, consider contacting a non-profit credit counselling service or a Licensed Insolvency Trustee before borrowing more.
Compare debt consolidation partners
Options from our Canadian lending partners. Promissory.ca is not a lender and does not make lending decisions.
CanadaDebtRelief.org
Debt relief and consolidation programs
Program eligibility and outcomes vary. Review any proposal with a licensed insolvency trustee before signing.
View optionAffiliate disclosure: Promissory.ca is a free comparison and referral service. We may receive compensation from lending partners when you click a partner link or submit an application. This compensation does not affect the information or comparisons we publish.
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Compare loan optionsAffiliate disclosure: Promissory.ca is a free comparison and referral service. We may receive compensation from lending partners when you click a partner link or submit an application. This compensation does not affect the information or comparisons we publish.