Orderly Payment of Debts – what is it?

Posted on 12 December 2022

Written by Chris Galea

An Orderly Payment of Debts (OPD) is an arrangement for debt repayment available in some provinces of Canada. An OPD requires an application to the Court for an Order to consolidate unsecured debts into one straightforward monthly payment. It has a repayment period of three years, and an interest rate of 5%. An Orderly Payment of Debts is legally binding on a number of types of unsecured debts, including payday loans and student loan debts. In order to be legally binding, your creditors must agree to be included when they are owed over $1,000.

What is an Orderly Payment of Debts?

An Orderly Payment of Debts (OPD) is a bankruptcy alternative in line with the Bankruptcy and Insolvency Act. Available in the provinces of Alberta, Saskatchewan, Prince Edward Island, and Nova Scotia, an OPD (also recognized as a consolidation order) may be a suitable debt relief option. Although not available in Quebec, residents of Quebec have access to a very similar process known as voluntary deposit which is based on income and number of dependents. A provincial body will file for an OPD with the courts on your behalf. Once granted, an OPD combines all of your unsecured debts into one simple manageable payment. The court will decide the amount of your monthly payment, and this will be distributed directly to your creditors. You will pay the unsecured debt you owe, as well as 5% interest.

What are the advantages of an Orderly Payment of Debts?

Depending on your circumstances and your province of residence, there is a number of eligibility criteria to meet in order to qualify for an Orderly Payment of Debts:

  • Residence of a province issuing Orderly Payments of Debts
  • Be able to repay your debts within three years
  • Have not faced legal proceedings from creditors, otherwise it may still be possible for creditors to seize your assets

If you do not meet the eligibility criteria, you should speak to a Licensed Insolvency Trustee. The only professionals in Canada legally able to file all forms of debt relief, they will review your circumstances and recommend a pathway for you to begin your journey to financial freedom.

What happens in an Orderly Payment of Debts?

There are a number of features of an Orderly Payment of Debts – it is legally binding on your creditors, meaning they must oblige. You also do not need to contact your creditors – they will be contacted on your behalf. The vast majority of your unsecured debts will be consolidated, and you will make one simple monthly repayment as a result. This repayment setup means that you can repay your debts in their entirety in three years or less. Other advantages of an Orderly Payment of Debts include reducing your interest rate to 5%, and protecting you from legal actions like wage garnishment. You can also keep your assets, including your home and a car, and have the support from a counsellor for guidance and support in skills like budgeting, money management, and rebuilding a good credit rating. It is also a good bankruptcy alternative.

What about other forms of debt relief?

As we have mentioned, an Orderly Payment of Debts is not available in some Canadian provinces. A consumer proposal is another popular form of debt relief, and is helpful for solving more complex debt problems. With consumer proposals, you can include property tax and tax debts, which is not possible in OPDs. Filing a consumer proposal is also a legal form of debt relief, and is the process of putting forward a proposed monthly payment to your creditors with the support of a Licensed Insolvency Trustee. It can reduce your debt by up to 80% while allowing you to keep your assets including your home and car. Contrary to an Orderly Payment of Debts, consumer proposals also cut the interest on your debt. While OPDs mean you need to repay the full amount of your debt, consumer proposals are able to reduce what you owe depending on what you are able to repay. One consideration is that consumer proposals last longer than OPDs, and so this it can impact your credit score for longer. A Licensed Insolvency Trustee can review your financial circumstances and determine which solution may be most appropriate for you. If you need a truly fresh financial start, bankruptcy is another option to consider, although it does have more serious implications for your assets and credit report.

What is Voluntary Deposit Law?

Although Orderly Payment of Debts is not available in Quebec, Voluntary Deposit Law is targeted at debtors living in Quebec. It is the process of making regular payments each month to the Court, depending on their income and dependents. The Court will then distribute these payments to your creditors. This process will continue until your debt is repaid in full, as well as 5% interest each year. Voluntary Deposit Law protects those in debt from wage garnishment and the seizure of their assets, aside from those that are secured. It is not always the most preferable option for residents in Quebec, but is helpful for some.

If you are considering an Orderly Payment of Debts and want to learn more about your other debt relief options, book a free consultation with Spergel. Our experienced Licensed Insolvency Trustees can review your financial circumstances and recommend the right pathway for you. Reach out today – you owe it to yourself.


Chris Galea

Chris Galea is a Chartered Accountant and Insolvency and Restructuring Professional with over 20 years’ experience as an LIT (Licensed Insolvency Trustee). He is also our resident expert on tax debt, COVID debt, and the region of Saskatchewan, Canada. When he’s not at the office educating people about bankruptcies and consumer proposals, Chris is playing pick-up hockey with his friends, spending time with his family, and learning Spanish!

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