Victoria has one of the highest credit card debts per capita in Canada, at an average balance of $12,874, but can this debt be forgiven? Debt forgiveness is a best case scenario for most Canadians in debt, but it’s not easy to find. This article will cover what debt forgiveness is and whether your credit card debt can be forgiven in Victoria.
Please note that we cannot guarantee whether debt forgiveness is possible for your debt. The results of debt forgiveness differ on a case-by-case basis and depend on the creditor. For more information, contact us directly for a free consultation. We’ll be happy to discuss your specific case in depth and what your options are.
What is Debt Forgiveness?
Debt forgiveness is when a lender agrees to forgive a portion or all of a borrower’s debt. This means the borrower no longer has to repay the full debt amount. Personal loans, student debt, and credit card debt are all eligible for debt forgiveness in certain circumstances.
Most credit card companies won’t offer this themselves. It’s up to the credit card holder to initiate negotiations.
There are two types of debt forgiveness:
- Consumer Debt Forgiveness: For individuals in financial distress, this involves negotiating with creditors to reduce the amount owed or to settle for a lesser amount. This type would include credit card debt.
- Student Loan Forgiveness: In Canada, specific programs exist for government student loans, offering forgiveness after a set period of time or under certain conditions (working in public service jobs).
Can my Credit Card Debt be Forgiven in Victoria?
Yes, you can try to get your credit card debt forgiven by negotiating new terms with your creditors. In Victoria, there’s a three ways you can do this:
- Informal Debt Settlement, which involves you informally negotiating new terms with each of your creditors separately. However, informal debt settlements aren’t legally binding for you or your creditors. Additionally, it will still have a negative effect on your score.
- Consumer Proposal, which is a legally-binding process regulated by the Bankruptcy and Insolvency Act where you formally negotiate your debt amount to be lowered by up to 80%. Your consumer proposal will need to be approved by at least 50% of your creditors to be valid. It will leave a R7 rating on your credit report.
- Bankruptcy is another legally-binding process regulated by the Bankruptcy and Insolvency Act. It can eliminate all the debt obligations you have, at the cost of surrendering assets. Bankruptcy will show a R9 rating on your credit report. It is the most drastic form of debt settlement in Canada.
In order to even be eligible for debt forgiveness, you must demonstrate insolvency, meaning you do not have the finances to continue paying off your debts.
As you’ve likely noticed by now, debt forgiveness is not an easy route to a debt-free life. Every option available will still subject you to severe credit impacts. However, for many living in Victoria, these options aren’t just a consideration, they’re a necessity. If you no longer have the ability to pay your debts, informal debt settlements, consumer proposals, and bankruptcy are essential pathways to paying off your debt and having a fresh start.
How Do I Choose?
There’s still more to learn about the advantages and disadvantages of informal debt settlement, consumer proposals, and bankruptcy.
If you’re unsure about your options and need more information, we’ve written articles that go more in-depth.
- Consumer Proposal vs Bankruptcy – How to Choose Wisely in 2025
- Alternatives to bankruptcy: a guide to help Canadians overwhelmed by debt
- Debt options in Canada: Know the sharks, beat the game
But if you’re tired of reading and want to speak to a Victoria debt advocate, 4 Pillars offers free consultations. We’re a consumer-first debt advocacy company that helps you understand the debt industry, your local debt solutions, and your rights as a consumer in debt. Most importantly, we don’t work for your creditors — we work for you. While LITs and credit counsellors are required to work for both the debtor and the creditor, 4 Pillars is uniquely debtor-focussed.
Other Options if You’re Not Insolvent
If you aren’t insolvent, you likely won’t be able to get your debt forgiven. But there are still tools available to you to help make paying off your debt easier.
A credit counsellor can work with you to create a debt management plan. This plan is created with your budget in mind and will merge all your debts into one monthly payment. While your debt won’t be forgiven, a credit counsellor can try and get the interest rates lowered on your behalf. Please note that credit counselors are largely funded by creditors.
Alternatively, a debt consolidation loan can be used to pay off your high interest debts. Once paid off, all you’re left with is the debt consolidation loan debt, which should have a lower interest rate. This turns your debts into one monthly payment under a lower interest rate, making it easier to pay off overtime.
