Bankruptcy Alternatives in Alberta
Over 125,000 Canadians will file for bankruptcy this year, including thousands in the Alberta region. However, filing for bankruptcy in Alberta should always be viewed as a last resort. Nobody wants to be declared bankrupt and, if it can be avoided, BankruptcyCanada.com will guide you to a more suitable solution.
While bankruptcy will be the only viable option for some candidates, the vast majority can look to a range of alternative debt relief programs to regain control of their financial situations. When you’re hit by mounting debts or can no longer pay the bills in Alberta, Canada, the following information is for you.
Why Should Bankruptcy Be The Last Resort?
The phrase ‘filing for bankruptcy’ is enough to send a shiver down the spine, but most people do not fully understand the reasons why alternative debt relief is the best solution. In truth, the reasons to avoid bankruptcy (unless it’s the only option) are threefold.
Filing for bankruptcy isn’t Armageddon, and there are several severe situations in which individuals under severe financial strains may find that it is the best solution available. If you have a friend or relative that used bankruptcy to eliminate debt before slowly rebuilding a stronger financial situation, it may tempt you to follow in their footsteps. Unfortunately, bankruptcy doesn’t discharge you from all forms of debt, and you will still be required to repay the following;
- All forms of secured debt.
- Student debts unless you completed your studies over 7 years ago.
- Child support and alimony payments.
Meanwhile, creditors may demand that recent debts are repaid by making the argument that you completed those transactions in the knowledge that you would soon file for bankruptcy.
The bankruptcy process is long winded and takes nine months plus one day to be completed – although this may be extended to 21 months if your income is higher than the threshold as set by the governors in Alberta. Your financial opportunities will be greatly limited throughout this period, which is known as undischarged bankruptcy. At the same time, there are other factors to take into account – not least the fact that filing for bankruptcy costs $1,800.
Moreover, it is possible for the Office of the Superintendent of Bankruptcy or creditors to oppose the discharge procedure to cause further delays and problems.
Many forms of debt relief stay on your financial record and credit history for at least 24 months. However, a bankruptcy stays on your file for seven years (up to 14 if it’s your second time of filing for bankruptcy) while the financial restrictions can impact you long after this time. Once discharged from bankruptcy, you can take out new credit agreements with relative ease, but you should expect to pay higher interest rates.
Finally, it is possible that assets will be lost due to the remaining secured debts that need settling. In short, if a better solution is available, you should grab it with both hands.
Alternative Debt Relief in Alberta
Appreciating the reasons for wanting to bypass bankruptcy is one thing, but actually finding the best debt relief strategy for your circumstances is another altogether. BankruptcyCanada can support you through every step of the process. Nonetheless, it’s important to familiarize yourself with the fundamentals of the most likely choices. Here are the key details you require:
Debt Consolidation in Alberta
Most debtors will have a basic understanding of debt consolidation. If you have previously tried and failed to secure a consolidation loan, however, you may assume that the door to consolidation is shut. Thankfully, there is another option as debt consolidation focuses on consolidating your repayments without borrowing more money.
Debt Management Programs are completed by a licensed insolvency trustee, who will negotiate deals with individual creditors to secure a lower rate of interest on your debts. There are several contributing factors that can influence how much money is saved. The list includes your credit rating, the amount of money owed, and the duration left on the agreements. However, it’s not uncommon for trustees to negotiate a total saving in excess of 50%.
For a creditor, they still get paid and remove the threat of bad debts caused by bankruptcy. For you, the debtor, it’s an ideal way to reduce your overall payments without the major repercussions that accompany filing for bankruptcy. Once the deal has been completed, you simply make a monthly repayment to the trustee, who will then satisfy the various creditors.
Advantages of Debt Consolidation
- Save thousands on interest rates over the course of your payment.
- See immediate benefits to cash flow elements.
- Put an instant end to debt collector calls.
Debt Settlement in Alberta
Debt settlement is another form of debt relief that can be used to reduce your overall repayments. Crucially, it has the potential to free you from your agreements as soon as the deal is confirmed, allowing you to rebuild the financial future.
The procedure works on the basis of using a debt settlement team to negotiate a one-off payment to creditors. This instant payment can unlock a significant saving, especially if all creditors agree to take a hit in return for a one-off repayment. However, it should be noted that you’ll need to have the available funds right away, which is an issue for many people that are faced with financial difficulties.
Still, even if it takes you a year to save, it can help you draw a line under this chapter far sooner than bankruptcy. It does mean that collectors may still contact you in the meantime, but it’s still better than facing the bankruptcy period.
Advantages of Debt Settlement
- Creditors may accept even smaller payments after receiving nothing for an extended period.
- The process will allow you to gain a discharge from debts far sooner.
- Once the agreement is completed, creditors cannot go back on it.
Consumer Proposals in Alberta
The concept of a consumer proposal is fairly simple to understand. A licensed insolvency trustee will negotiate new repayment terms with your creditors until a new agreement can be reached at a far lower rate than before. In addition to reducing the monthly payments, it consolidates several accounts into one, thus keeping your finances more organized.
While the benefits for you, the debtor, are clear, you may be wondering why creditors would accept this deal. Essentially, if you were to file for bankruptcy in Alberta, it’d mean that you default on those agreements. So, for the creditor, it’s better to reclaim something than write off everything as a bad debt. Moreover, when the debt is relatively small (from a creditor’s perspective), they’ll be happy to accept the partial payment in return for saving time and hassle. After all, creditors don’t want to use debt collection agents.
When a trustee submits a proposal, they will analyze your debts and current financial situation to create a proposal based on what you can realistically afford to pay. This can often cut the cost of your initial debt by up to 70% while also freezing the interest rates. Moreover, once 50% of the overall debt accepts the new payment plan, all other creditors will have to accept it too.
Advantages of Consumer Proposals
- It’s a legally binding agreement, giving you financial and emotional security.
- They remain on your credit report for two years rather than seven.
- It puts an instant end to nuisance calls and stretches your repayment plan.
Which Is Right For You?
No two debtors are the same, and there are many contributing factors that will help determine which type of debt relief is right for you. Some of the most telling features include:
- How much debt you have.
- The sources of your debt.
- Your revenue and ability to make partial repayments.
- Age, marital status, and number of dependents.
- Whether you’ve previously filed for bankruptcy.
- Your financial assets.
A full audit is needed to analyze all of the above features and more. Only then can you find the best road to a brighter financial future. Aside from the immediate and long-term financial benefits, it’s the only way to achieve true peace of mind.
Credit Counseling in Alberta
When drowning in debt, a lack of direction and understanding is the biggest source of stress and panic in your life. The road to financial recovery can encounter several bumps along the way, which is why you need a strategy that is tailored to your personal journey. Our trustees and financial advisors don’t only provide impartial advice about bankruptcy and alternative debt relief in Alberta Canada; we can also answer any questions you may have regarding joint debts, debts that are carried over from a divorce, and any other complexities surrounding your unique situation.
Additional reasons to choose BankruptcyCanada’s financial services include:
- We offer complete confidentiality during the initial meetings.
- We have helped over 200,000 Canadians with their financial problems.
- Our network of offices in Alberta ensures optimal convenience.
- Our extensive knowledge is underlined by a human empathy of your situation.
- We boast over 21 years of experience in the industry.
If you want to learn more about debt relief in Alberta, BankruptcyCanada is the only outlet you need. From inspections of your financial situations to implementations of alternative debt relief, we’re here to help. Take the first steps by calling our 24/7 hotline on (877) 879-4770 now.