Step 1: Assessment
Every credible plan starts with a complete and accurate picture of what is owed. List every account — credit cards, lines of credit, payday loans, auto loans, and anything already placed with a collection agency — along with the current balance, interest rate, minimum payment and account status. Pull a free credit report from both Equifax Canada and TransUnion Canada; the two bureaus do not always carry identical data, and a missed account here undermines every later step.
Separate accounts into secured (mortgage, auto loan) and unsecured (credit cards, lines of credit, payday loans). This distinction matters later, because secured creditors hold collateral and unsecured creditors generally have more room to negotiate.
2
Bureaus to pull (Equifax, TransUnion)
100%
Of accounts must be captured, including collections
1 page
Target length for the master debt inventory
Step 2: Budgeting
With the inventory complete, build a budget from three months of actual bank and card statements rather than estimates. Categorize spending into fixed essentials, variable essentials, existing debt minimums and discretionary spending. What remains after fixed and variable essentials is your true repayment capacity — the number every later step depends on.
Do not skip the buffer
Reserve $500 to $1,000 as a starter emergency fund before committing every surplus dollar to repayment. Without it, the next car repair or medical expense typically goes back onto a credit card, undoing months of progress.
Step 3: Interest reduction
Interest is what turns a manageable balance into a moving target. Before accelerating payments, look for legitimate ways to lower the rate itself: a balance transfer to a lower promotional rate, a consolidation loan that replaces several high-rate cards with one lower-rate installment loan, or a direct call to the issuer requesting a temporary rate reduction due to hardship. Even a five-point reduction on a $10,000 balance can save several hundred dollars over a two-year payoff.
Rank remaining accounts by interest rate. This ranking becomes your repayment order in Step 5 — the avalanche method directs every surplus dollar at the highest-rate balance first, which minimizes total interest paid over the life of the plan.
Step 4: Settlement negotiation
For accounts that are seriously delinquent or already in collection, a negotiated settlement or structured payment arrangement is often faster and less costly than continuing minimum payments indefinitely. Contact the creditor or its collection agency directly, reference the repayment capacity figure from Step 2, and request the arrangement in writing before making a payment.
In Ontario, collection agencies are licensed and regulated under the Collection and Debt Settlement Services Act, R.S.O. 1990, c. C.14, which sets conduct standards for contact and disclosure. A written agreement protects both sides and gives you a document to reference if a dispute arises later.
Step 5: Execution
Put the plan on autopilot. Automate every minimum payment on its due date, and set a separate automatic transfer for the accelerated payment the day after each pay date, so it moves before discretionary spending has a chance to claim it. Direct the accelerated amount to the account ranked first in Step 3, and once it is paid off, roll that payment into the next account in the ranking.
Track progress monthly against the plan you documented. A visible, updated number is one of the strongest predictors of a plan being carried through to completion.
Step 6: Maintenance
Once every unsecured account is cleared, maintenance replaces execution. Redirect what was the accelerated payment into savings and retirement contributions. Keep one or two older credit accounts open and active with a small recurring charge paid in full each month, which preserves account age and a healthy utilization ratio on your credit file.
Review annually
Pull your credit report at least once a year to confirm it reflects paid and closed accounts accurately, and revisit your budget whenever income or fixed costs change materially. Contact FDR Asset Group if you need help reviewing an account we hold on file.