What is an orderly payment of debts?
An OPD involves consolidating all of your unsecured debt into installment payments with a 5% interest rate for up to 5 years. This 5% interest rate is usually lower than those charged by many creditors, which will allow you to pay off your debt more quickly and affordably – without pressure from your creditors. You can calculate the monthly payment of your OPD by combining your total debt, adding 5% interest, and dividing the sum by a maximum of 60 months.
An Orderly Payments of Debts (OPD) is a legally binding debt-relief option, meaning that you will legally be discharged from your unsecured debt upon completion of your OPD. An OPD also offers the same creditor protection that a consumer proposal or a bankruptcy gives, a “stay of proceedings”. While under a stay of proceedings, you are protected against debt collection calls, wage garnishment, debt-related legal action, and interest accruement.
Which option is better for me: an OPD or a Consumer Proposal?
In most cases, a consumer proposal will be more affordable than an OPD, simply because a proposal is a settlement (you will pay just a portion of your total debt to settle the entire debt), and an OPD is debt consolidation (you will combine your entire debt into one payment with interest). There will be a similar change in your credit rating for both consumer proposals and OPD (R7). However, in some cases where your debt load is small, an OPD can be more affordable. If you aren’t sure which option would be more suitable for you, we can provide some guidance during your free consultation with us.
If you have a substantial amount of debt owing to the CRA, an OPD may not the best option for you, because you cannot include any amounts owing to the CRA in an OPD. In this case, a consumer proposal may be a better option for you; besides bankruptcy, a consumer proposal is the only process where you can settle Canada Revenue Agency (CRA) debt such as GST and income tax.
An OPD is better for those who:
- can afford to pay their debts in full, but have trouble managing finances due to other issues such as high-interest rates or short-term payment requirements (such as payday loans).
- cannot qualify for a consolidation loan.
- debt loan is small enough by which a consumer proposal would be more costly.
Where to file an OPD?
In Alberta, the program is run by Money Mentors, a not-for-profit organization. For more information, see their website here: https://moneymentors.ca/