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Financial Hardship Assistance, Programs, Info & Help

Jump to SectionWhere to find financial hardship programs and help in Canada.

What is a Financial Hardship? - Definition

Loan, Mortgage, & Credit Card Financial Hardship Programs



Credit Cards

Reasons to Allow Unlocking & Withdrawal of Locked In Funds

Provincial Rules for Unlocking Funds Due to Financial Hardship

How to Find the Best Help & Assistance

What is a Financial Hardship? – Definition

A financial hardship is when someone is willing to pay their debts as they originally agreed to but is unable to do so due to a significant unexpected event or unforeseen circumstances that have seriously impacted their ability to pay. Events that can cause financial hardship include the loss of a spouse, divorce, losing your job, a serious injury or illness, a major emergency, a natural disaster, or even getting in over your head in debt.

In Canada, Financial Hardship programs are sometimes available to help consumers in the following areas (click on any topic to learn more):

Loan, Mortgage, & Credit Card Financial Hardship Programs

Loans – Contact Your Bank for Different Payment Arrangements

If you have a loan with a financial institution and you anticipate that you will not be able to make one or more payments or you can no longer afford your current payments and need to reduce them, contact your bank and see what arrangements you can work out. Financial institutions do not have formal hardship programs. Instead, they look at each situation on a case-by-case basis. Some situations are easier to accommodate than others. If your loan is secured by an asset such as a vehicle, your bank could look at refinancing your loan to create an arrangement that will work for you. For any request like this, it would be wise to create a budget showing your monthly income and expenses. This will allow your banker (and any higher-ups they need approval from) to review it to see if it looks reasonable.

If you have been paying more on your loan than you were required to, then your bank may be able to allow you to miss the number of future payments your extra payments in the past have effectively already made. It’s possible that approaching the situation like this won’t violate your original agreement since the loan will still be repaid within the amortization period originally agreed to. Situations like this are often tricky and may require the person you are dealing with at a bank or credit union to check with a more senior bank officer who has more experience. The important thing here is to be as pro-active as possible and discuss the matter with your bank or credit union as soon as you foresee a problem.

Mortgages – Insured Mortgage Qualify for Special Financial Hardship Programs

If need to miss one or more mortgage payments and your mortgage is insured by CMHC (Canada Mortgage & Housing Corporation) or Genworth, they both have financial hardship programs to help keep you in your home as you work through the challenges you are experiencing. CMHC’s program is called their “Default Management Program and Genworth’s is called their “Homeowner Assistance Program.” Both programs can utilize powerful tools to help work things out. Check out the program for your mortgage insurer using the links above and then contact your lender to start the process. You may need to help your lender a bit as the person you’re dealing with at a bank or credit union may not be aware of these programs, but they do exist and they can really help (if you don’t know if your mortgage is insured by CMHC or Genworth, check the mortgage documents you signed with your lender or ask your lender).

If your mortgage is not insured, then you likely have enough equity in your home to refinance and create a repayment plan that will work for you. If you’ve been paying more on your mortgage than you are required to (i.e. paying a little extra bi-weekly rather than the normal monthly payments), then this could also give your financial institution some room to accommodate you without requiring you to refinance. It’s also helpful with something like this if you can be as pro-active as possible. The longer you wait, and the more severe your situation gets, the less options you’ll likely have.

Credit Cards - The Most Common Interest Relief Program is Called a Debt Management Program

In Canada, most credit cards and banks don’t really have financial hardship programs. Instead non-profit credit counselling agencies offer a credit card financial hardship program called a Debt Management Program (DMP). To qualify for a DMP, you need to meet with a Credit Counsellor. They’ll help you create a budget, go over your financial situation, and help you explore all options that may be available to you. A Debt Management Program may be one of these options, but there are others too. It all depends on your financial situation, the province you live in, and your financial goals. A Debt Management Program either completely or drastically reduces your credit card interest rates, consolidates all your payments into one affordable monthly payment, and ensures your debts are paid off in 5 years – although two and a half years is closer to the average.

While most credit card companies don’t offer financial hardship programs, they can offer special arrangements on a case-by-case basis. Two credit card companies, however, do have a hardship program. Both Capital One and Canadian Tire have programs that reduce your interest rate to zero for a period of time. However, if you miss a payment, the program ends. A DMP through a non-profit credit counselling agency, on the other hand, usually has a bit more flexibility. You should also be aware that any special program or arrangement like this is likely to negatively impact your credit for a period of time. Make sure to find out all the details before proceeding with any arrangement. To find explore your options and find out if some sort of financial hardship program may be appropriate for your situation, contact a non-profit credit counselling organization near you. Appointments are usually completely free and confidential.

Locked-In Retirement Funds Can Be Unlocked and Withdrawn for Financial Hardship Reasons in Some Provinces

We've provided some detailed information about withdrawing funds from a locked in RRSP for financial hardship reasons here.

How to Find the Best Help & Assistance

For all cases involving financial hardship – even withdrawing locked-in funds – the best person to speak to first is a non-profit Credit Counsellor. Many times they find that some people make a difficult situation worse by taking steps that only leave them in a worse financial position. Experienced, well trained Credit Counsellors are financial hardship experts. They can guide you through all your options and help you figure out what would be in your best interest. The nice thing is that an appointment with a non-profit Credit Counsellor is typically free, and they’re able to provide you with an objective perspective and helpful information. To find a non-profit credit counselling organization near you, click here.


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