Debt Settlement: FAQ

We’re here to answer your questions about debt settlement in Canada, and to help guide you toward a fresh financial start.

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General faq

Is debt settlement legal in Canada?

Yes, but only consumer proposals — administered by Licensed Insolvency Trustees — are legally binding and governed by Canadian law. This is the safest and most effective form of debt settlement in Canada.

What’s the difference between debt settlement and debt consolidation?

Debt consolidation rolls multiple debts into a new loan with one monthly payment. Debt settlement reduces the amount you owe through negotiation, with no new borrowing required.

Are debt settlement companies in Ontario regulated?

Yes. In Ontario, debt settlement companies must comply with the Ontario Collection and Debt Settlement Services Act. However, only Licensed Insolvency Trustees can file legal settlements like consumer proposals.

Will creditors always accept a settlement offer?

No, informal settlements are not guaranteed. That’s why working with a Licensed Insolvency Trustee on a consumer proposal offers more protection and a higher success rate — Spergel has a 99% acceptance rate.

Can I settle my debt on my own?

Yes, but it’s challenging. Creditors may refuse your offer, and you may still face collection actions. Working with a regulated professional provides structure, support, and better results.

Does debt settlement stop collection calls?

A consumer proposal — the legal form of debt settlement — stops all collection calls, legal action, and wage garnishments once filed.

Is debt settlement available across Canada?

Yes. Spergel offers debt settlement support, including consumer proposals, to individuals across Canada, including debt settlement in Ontario.

Eligibility & Process

Am I eligible for a debt settlement program?

If you owe more than $10,000 in unsecured debt and are unable to manage regular payments, you may be eligible. A Licensed Insolvency Trustee will assess your situation and guide you on the best option.

How long does the debt settlement process take?

It depends. Informal settlements can take months to negotiate with no guarantee of success. A consumer proposal typically takes just a few days to file, with a structured repayment plan lasting up to five years.

What debts can be included in a debt settlement?

Debt settlement can cover most unsecured debts: credit cards, payday loans, medical bills, utility bills, and more. It cannot include secured debts like a mortgage or car loan.

Can I settle tax or government debt?

Yes — through a consumer proposal, even Canada Revenue Agency (CRA) tax debt can be included and reduced. This isn’t possible through informal settlements or credit counselling.

What happens if my creditors reject the settlement?

In informal debt settlement, creditors can refuse and continue collection actions. In a consumer proposal, 50% of creditors must agree — and when they do, all are legally bound. At Spergel, we have a 99% acceptance rate on any consumer proposals we file.

How do I apply for a debt settlement program?

Your first step is to book a free consultation with a Licensed Insolvency Trustee. At Spergel, we walk you through every step to help you understand your options and file the right solution.

What’s the difference between working with a debt settlement company vs. a Licensed Insolvency Trustee?

Debt settlement companies in Ontario are not regulated to file legal settlements and charge upfront fees. Licensed Insolvency Trustees are federally regulated professionals who offer legal protection and more effective solutions.

Impact & Results

Will debt settlement hurt my credit score?

Yes, temporarily. However, it’s often less damaging than ongoing missed payments or default. A consumer proposal will stay on your credit report for three years after it’s completed, and then fall off.

Can I rebuild my credit after debt settlement?

Absolutely. Many Canadians rebuild their credit with responsible financial habits — and some start seeing improvements even while making payments under a consumer proposal.

How much debt can I expect to settle?

In many cases, a consumer proposal can reduce total unsecured debt by up to 80%. The exact amount will depend on your financial situation and the terms negotiated with creditors.

Will I lose my assets if I choose debt settlement?

No. One of the biggest advantages of a consumer proposal — the legal form of debt settlement — is that you keep your home, car, and other assets while settling your debt.

Can I pay off my settlement early?

Yes. If your finances improve, you can pay off your consumer proposal early without penalty — giving you a faster path to financial freedom.

How does debt settlement help with financial stress?

It provides clarity, structure, and relief. Knowing your payments are affordable and protected by law reduces anxiety and gives you control over your financial future.

Get all your questions answered

Every financial story is different — and we’re here to listen. Let’s talk about your situation, and how debt settlement could help.

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Find Out How Much You Can Save With a Consumer Proposal!

A consumer proposal is the only legally backed form of debt settlement in Ontario and can reduce your total debt by up to 80%. Use our free debt calculator to see what your new payments could look like.

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Real Canadians. Real Success — Like Jordan

“After years of struggling with escalating tax debt and the overwhelming stress it brought into my life, finding Spergel was a turning point for me. Their team approached my situation with an incredible mix of professionalism, empathy, and expertise, taking the time to understand the nuances of my financial dilemma. They negotiated directly with the CRA, securing a payment plan that was both manageable and fair, and even managed to reduce my overall debt. What truly stood out was how they empowered me with the knowledge and tools to take control of my finances moving forward. Thanks to Spergel, I can focus on my career and being a father without the constant worry of tax debt looming over me.”

– Jordan, Ontario

Read Jordan's Story

Jordan's Story is just one of many

It shows that once you face your debt and get the right help, life can get better – quickly. Discover more Success Stories of Canadians we’ve helped, or reach out to us.

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