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How to Get Out of Credit Card Debt in Alberta: Your Options Explained
If you are an Alberta resident struggling with credit card balances, high-interest payments, or multiple monthly debt payments, it can become difficult to keep up with your financial obligations.
Credit card debt can become difficult to manage when interest continues to accumulate while only minimum payments are being made. If you are also relying on credit to cover everyday expenses, the balance may continue to increase even when you are making regular payments. This can create a cycle where the account stays active, but the balance does not meaningfully go down.
For some people, credit card debt may result from unexpected expenses, income loss, family changes, or other financial circumstances. When debt becomes difficult to manage, understanding the options available to you can help you decide what to do next.
There are several ways to address credit card debt in Alberta. The appropriate option depends on your income, expenses, total debt, assets, and ability to make payments.
Why Can Credit Card Debt Be Difficult to Repay?
Credit card debt can become difficult to manage when high interest costs make it harder to reduce the balance.
Making only the minimum payment may keep the account current, but it may take much longer to repay the balance. If additional purchases continue to be made, the amount owing can also increase.
Some common signs that credit card debt may require a closer review include:
Making only minimum payments each month
Increasing credit card balances
Using new credit to pay existing debts
Falling behind on other household expenses
Receiving collection calls or letters
Having little money left after making debt payments
These situations do not automatically mean that you need to file a consumer proposal or bankruptcy. However, they may be signs that it is time to review your debt and understand what options may be available.
Ways To Manage Credit Card Debt
The first step is to look at your complete financial picture. This includes your income, household expenses, credit card balances, other debts, assets, and monthly payments.
Depending on your circumstances, debt counselling, debt consolidation, a consumer proposal, or bankruptcy may be options to consider.
Debt Counselling
If your debt is still manageable but you are having difficulty creating a budget or keeping up with payments, debt counselling may be an option.
Professional budgeting guidance can help you review your income and expenses, create a realistic budget, and develop a strategy for paying down debt.
Addressing financial concerns early may give you more time to make changes before debt becomes more difficult to manage.
Debt Consolidation
Debt consolidation combines multiple debts into one payment. Depending on the type of consolidation available to you, it may simplify your monthly payments or reduce the interest you pay.
However, debt consolidation does not eliminate the debt. It may also be difficult to qualify if your credit score, income, or debt level has already been affected. You are still responsible for repaying the amount borrowed, and whether this option is available may depend on your financial circumstances.
In Alberta, another debt consolidation option is the Orderly Payment of Debts (OPD) program. OPD is a government-legislated debt consolidation program that allows eligible individuals to combine unsecured debts into a single monthly payment at a fixed 5% interest rate. In Alberta, the OPD program is exclusively administered by Money Mentors, a non-profit credit counselling organization.
Because an OPD requires you to repay your debt in full, plus the fixed 5% interest, it can be more expensive than a consumer proposal. A consumer proposal may allow an eligible individual to repay only a portion of their unsecured debt, depending on the terms of the proposal.
Before choosing debt consolidation, it can be helpful to understand how it compares with other debt relief options.
Consumer Proposal
For some Albertans with significant unsecured debt, a consumer proposal may be an alternative to continuing with unaffordable credit card payments.
A consumer proposal is a legal process under Canada's Bankruptcy and Insolvency Act. It allows an eligible individual to make an offer to unsecured creditors to repay a portion of what is owed, extend the repayment period, or both.
Credit card balances are generally unsecured debts that can be addressed through a consumer proposal.
Once a consumer proposal is filed, a stay of proceedings stops most collection activity involving the unsecured debts included in the proposal. Interest also stops accumulating on included debts.
A consumer proposal can last for up to five years, depending on the terms of the proposal.
Bankruptcy
In some circumstances, bankruptcy may be an appropriate option when there is no realistic ability to repay unsecured debts.
Bankruptcy is a federally regulated legal process under Canada's Bankruptcy and Insolvency Act. Once bankruptcy is filed, a stay of proceedings takes effect for eligible unsecured debts included in the bankruptcy.
This can stop collection activity related to those debts, which may include creditor calls and wage garnishments.
Bankruptcy is not automatically the appropriate solution for everyone with credit card debt. Factors such as your income, assets, household circumstances, and total debt can affect which option may be available.
Our guide, Bankruptcy Filing, explains how personal bankruptcy works and what alternatives may be available.
What Should You Do If Credit Card Debt Is Becoming Difficult to Manage?
If you are struggling to keep up with credit card payments, reviewing your debt sooner can give you more time to understand your options.
You do not have to decide on a consumer proposal or bankruptcy simply because you schedule a consultation. An initial in-person or online consultation gives you an opportunity to review your circumstances, understand available solutions, and learn what each option could mean for you.
At SCB Debt Solutions, our Licensed Insolvency Trustee has more than 25 years of experience helping people understand their debt-relief options. We work with people in Calgary, Edmonton, Red Deer, and communities across Alberta. We can review your income, expenses, assets, and debts and explain whether debt counselling, a consumer proposal, bankruptcy, or another approach may be the right fit for you.
In-person consultations are available at our Calgary office, while online consultations can be scheduled from anywhere in Alberta.
Every financial situation is different. The right option depends on what you owe, what you own, and what you can realistically manage.
If you are looking for help with credit card debt in Alberta, book a free, confidential consultation with SCB Debt Solutions to understand your options and take the first step toward regaining financial stability.
FAQs related to Credit Card Debt
Q1. How much credit card debt is normal to have?
There is no single amount of credit card debt that is considered normal. What matters is whether you can comfortably make your payments while covering essential expenses.
Q2. What are the best ways to pay off credit card debt in Alberta?
Start by reviewing your budget, reducing unnecessary expenses, and directing extra money toward your credit card balances. Paying more than the minimum can reduce interest costs.
Q3. Which card should I pay first - the card with the highest interest rate or the smallest balance?
Both approaches can work. Paying the highest-interest card first can reduce overall interest costs, while paying the smallest balance first can provide quicker progress and motivation. Choose the approach that fits your budget and helps you stay consistent.
Q4. Can a credit card company sue me?
Yes. Credit card debt is generally unsecured debt, but a creditor can take legal action to recover an unpaid balance. If you receive a civil claim in Alberta, it is important to respond within the required timeframe rather than ignore it.
Q5. What is the limitation period for credit-card debt in Alberta?
In Alberta, limitation periods for debt claims can depend on the circumstances, including when the claim arose and whether the debt was acknowledged. Because specific rules can affect your situation, consider obtaining legal or professional advice before relying on a limitation period.
