Options for Reducing Your Debts

By Judy Hannah, Home Economist

Updated in June 2015 by the Manitoba Association of Home Economists

Being faced with debts can be an overwhelming situation but, while there is rarely a perfect solution, there are usually options for dealing with them. Take a look at the following ideas (adapted from the Credit Counselling Services of Alberta) to see if you can find any starting points:

Options for Reducing Debts

The strategy you choose to reduce or eliminate your debt will depend on:

  • the amount of debt you have,
  • your income and,
  • your personal goals.

Here is a brief overview of some of the options.


Does your income match your expenses (living expenses, irregular and debt payments)? Is there anything you can change? Sometimes it’s just a matter of putting it all on paper. Then you can decide where you can decrease expenses and where you want to increase your income.

Increase income by:

  • Having a garage sale
  • Getting a part-time job
  • Selling your used clothing
  • Renting out the spare room
  • Selling unsecured assets. Unsecured assets are anything you have paid for in full and haven’t promised as security to a creditor.

Decrease expenses by:

  • Minimizing bank charges
  • Rolling your own cigarettes or better yet give them up.
  • Using coupons
  • Borrowing books/videos/CDs from the library
  • Shopping at consignment clothing stores
  • Giving a gift of time rather than buying a present.
  • Taking your lunch. Saving $6 a day saves you $1,500 a year.
  • Skipping your morning coffee saves you at least $375 a year.

Refinance over a longer period of time

You can approach creditors with this idea. Some will be more receptive than others will.


A consolidation loan could mean a reduced interest rate, a longer payout period and lower monthly payments. The consolidator may want the debt secured and/or a co-signer.

Lump Sum Payment

Expecting a large lump sum of money? Talk to your creditors to see if they will take a lump sum payment. If they do be sure to get a final agreement in writing that states that you have settled for a final payment.

Negotiate with Creditors

Occasionally, creditors will set up a different payment schedule for you to make your payments more manageable. You make lower payments over a longer period of time. If you are able to negotiate this with the creditor, be sure to get the agreement in writing.

Debt Management Program

Available through non-profit credit counselling agencies. This type of program can help by consolidating all your monthly credit card statements into one monthly payment. More information can be found at Credit Counselling Society.

Consumer proposals

A Trustee in Bankruptcy handles consumer proposals (visit the Industry Canada site for more information). Creditors are offered so many cents on the dollar. Certain conditions apply, secured debt is not included and there is a trustee fee.


A Trustee in Bankruptcy carries out bankruptcies. There are certain types of debt bankruptcy won’t deal with. Choosing to resolve your debt situation through bankruptcy is an important decision. Before you decide be sure you understand:

  • How declaring bankruptcy affects you.
  • What it will cost.
  • How it works.
  • What other options may be available to you.

Information from Bankruptcy Canada website.