Debt Consolidation in Ontario — Without A Loan
Which Debt Consolidation Option Is Right for You?
Considering Debt Consolidation in Ontario?
A consumer proposal can work like debt consolidation by combining included unsecured debts into one affordable monthly payment, but it is not a loan.
David Sklar & Associates does not offer loans. We help people explore legal debt relief options that can reduce debt, stop interest, and help you move forward without borrowing more money.
Debt Consolidation Does Not Always Mean
Taking Out a Loan
Many people think debt consolidation means borrowing more money to pay off existing debt. But if your payments are already hard to manage, another loan may not be the right fit.
A consumer proposal can work like debt consolidation by combining included unsecured debts into one affordable monthly payment. The difference is that it is not a loan. It is a legal debt relief option filed through a Licensed Insolvency Trustee that can reduce what you owe, stop interest, and help you move forward without borrowing more money.
6 Debt Consolidation Options in Ontario Compared
Consumer proposal :
A legal debt relief program filed through a Licensed Insolvency Trustee (LIT). It lets you repay only a portion of what you owe, interest-free, over up to five years.
Pros:
- One monthly payment
- Can reduce your debt by up to 80%
- No interest or penalties
- Protects your assets and stops collections
- No new loan required
Cons:
- Shows on your credit report while you complete the proposal
- Must be accepted by your creditors
- Monthly payments must be maintained
Bottom line: A consumer proposal can be a powerful option if you want to consolidate debt without taking on another loan.
Debt consolidation loan:
A loan that combines multiple debts into one fixed monthly payment. You’ll need good credit, steady income, and sometimes collateral to qualify.
Pros:
- One simple monthly payment
- Potential interest savings with a low rate
- Can lower monthly payments
Cons:
- No reduction of your principal
- Hard to qualify with poor credit
- Longer terms mean more interest overall
Bottom line: Works only if you get a lower rate and can repay the full balance.
Balance transfer credit card:
Move existing credit card debt to a new card with a low or 0% introductory rate. This can help you save on interest and pay down your principal faster.
Pros:
- Save money on interest
- Pay down debt faster
- Quick online approval
Cons:
- Transfer fees up to 5% and limits on amounts
- Intro rate lasts only 6–18 months
- Requires good to excellent credit
Bottom line: A balance transfer card works if you can pay off your debt before the promo rate ends and have good credit to qualify.
Line of credit:
A flexible way to borrow only what you need, when you need it. Payments vary based on how much you owe, and interest rates are usually lower than credit cards.
Pros:
- Borrow as needed, pay interest on use
- Flexible payment schedule
- Lower rates than credit cards if you qualify
Cons:
- Requires good credit for the best rates
- Put your home at risk if you default
- Variable rates can increase over time
Bottom line: A line of credit offers flexibility, but if you overspend or miss payments, it can get expensive, and risky if your home is used as collateral.
Home equity loan:
A second mortgage that uses your home’s equity to consolidate debt, usually at lower interest rates.
Pros:
- Lower interest than other debt
- Higher borrowing if you have equity
- Fixed, predictable payments
Cons:
- Hard to qualify (good credit, income, 20% equity)
- Home at risk if payments missed
- Setup involves fees and appraisal
Bottom line: A home equity loan can cut interest costs, but missed payments put your home at risk.
Debt management program (DMP):
A credit counselling program that combines unsecured debts into one monthly payment, often reducing or waiving interest, without taking a new loan.
Pros:
- Potential savings on interest
- Relief from collection calls
- Money management guidance
Cons:
- Repay full principal, no forgiveness
- Not legally binding on creditors
- Some debts excluded
Bottom line: A DMP helps manage credit card and personal loan payments but doesn’t reduce debt; best for simpler cases, not CRA-related debt.
Consolidate Debt and Stop Interest With a Consumer Proposal
Consolidating debt with a loan is an option for individuals that can qualify for a low-interest loan, from a creditable financial institution. For those unable to qualify for a low-interest loan, consolidating your debt with a consumer proposal may be a better option.
Consumer Proposal vs Debt Consolidation Loan
Consumer Proposal
Unlike debt consolidation loan, a consumer proposal combines all of your unsecured debts into one low monthly payment and completely eliminates high-interest payments.
Debt Consolidation
A debt consolidation loan does not eliminate interest, stop collection calls, wage garnishment, or offer the legal protection a consumer proposal can.
Calculate Your Debt Consolidation Options
Calculate savings
Consumer Proposal - 0% Interest
Debt Consolidation Loan - 30% Interest
Do Nothing - 19% Interest
* Calculations above are made over a 5 year period at a rate of 80% savings. This calculator provides an estimate of the total savings you may receive when filing a consumer proposal. Actual results may vary. Your payments will depend on your income, assets, and debts.
When a Debt Consolidation Loan Isn't the Answer
Loans can stop collection calls, but they don’t reduce your debt. You must repay 100%, and low interest isn’t guaranteed, especially with poor credit.
Talk to a Licensed Insolvency Trustee, there may be safer, more effective ways to get debt relief.
The Real Cost of Borrowing to Consolidate Debt
Debt consolidation loans can make your payments feel simpler, but interest can make the total cost much higher over time. A consumer proposal is different. It is not a loan, but it can combine included unsecured debts into one affordable monthly payment.
Debt Consolidation Loan
Debt Management Plan
Line of Credit
Consumer Proposal
Balance Transfer Card
Home Equity Loan
This example is for illustration only. Actual payments, interest rates, proposal terms, and total repayment amounts depend on your financial situation, creditor approval, and the option selected.
*Interest rates fluctuate based on lender.
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Ontario Debt Consolidation FAQs
Does David Sklar & Associates offer debt consolidation loans?
No. David Sklar & Associates does not offer debt consolidation loans. We are a Licensed Insolvency Trustee firm that helps people explore legal debt relief options, including consumer proposals and bankruptcy.
Is a consumer proposal like debt consolidation?
Yes, in some ways. A consumer proposal can combine included unsecured debts into one affordable monthly payment. The difference is that it is not a loan. It may also reduce what you owe, stop interest, and provide protection from most unsecured creditors.
What is the difference between a debt consolidation loan and a consumer proposal?
A debt consolidation loan combines your debts into one new loan that you repay with interest. A consumer proposal is a legal debt solution filed through a Licensed Insolvency Trustee. It can combine included unsecured debts into one payment without borrowing more money.
Can I consolidate debt if I have bad credit?
It may be difficult to qualify for a debt consolidation loan with bad credit. If you are turned down for a loan or the payments are too high, a consumer proposal may be an option to consider.
What debts can be included in a consumer proposal?
A consumer proposal can include many unsecured debts, such as credit cards, personal loans, payday loans, lines of credit, income tax debt, and some student loans. Secured debts, such as a mortgage or car loan, are usually handled separately.
Will debt consolidation stop collection calls?
A debt consolidation loan does not provide formal legal protection from creditors. A consumer proposal or bankruptcy can stop most collection calls, wage garnishments, and legal action once filed through a Licensed Insolvency Trustee.
Is a consumer proposal better than a debt consolidation loan?
It depends on your situation. A loan may work if you can qualify for a lower interest rate and afford the payments. A consumer proposal may be a better fit if you cannot qualify for a loan, need lower payments, or want to avoid taking on more debt.
How do I know which option is right for me?
The best option depends on your income, debts, assets, credit, and monthly budget. A Licensed Insolvency Trustee can review your situation and explain what options may be available.
Advice on Debt Consolidation
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