Bankruptcy Alternatives in Calgary
When you find yourself falling deeper and deeper into the dark hole of debt, bankruptcy may feel like the only way out.
Before filing for bankruptcy in Calgary, though, you should familiarize yourself with alternative debt relief options.
In many cases, they will put you on a far smoother road to financial recovery.
Filing For Bankruptcy in Calgary: The Drawbacks
Over 125,000 Canadian citizens will file for bankruptcy this year, including thousands in Stampede City, and it will be the best (only) solution for many of them.
In fact, you may know someone that has rebuilt their financial status after a bankruptcy discharge.
Nonetheless, bankruptcy in Calgary should be considered a last resort for several key reasons.
- Bankruptcy won’t free you from all debts. All secured debts, student loans (unless they date back at least seven years), and child maintenance payments still need to be paid.
- Filing for bankruptcy costs $1,800 while it is possible that you will be forced to relinquish assets, including your home or vehicle.
- The bankruptcy process takes nine months and one day under normal circumstances but can be extended to 21 months for individuals with a high level of income.
- Bankruptcy in Calgary is a serious financial issue that will appear on your credit history for seven years and may cause damage that lasts even longer.
- The bankruptcy process can be delayed or rejected by a host of sources, such as creditors or the Office of the Superintendent of Bankruptcy.
Under the right circumstances, filing for bankruptcy may be the best solution for your financial health and rebuilding mission.
However, anyone that has alternative debt relief opportunities on offer should investigate them before making a bankruptcy application.
Bankruptcy Alternatives in Calgary: Consolidation, Consumer Proposals, & More
No two debtors are in identical situations, and the right type of debt relief for you could be influenced by a wide range of factors.
The list includes, but is not limited to:
- Whether your debts are secured or unsecured.
- The total value of the debts.
- Your current employment situation and other financial obligations.
- Future financial goals.
- Whether you have previously been bankrupt.
Choosing the right type of debt relief will immediately lift a weight from your shoulders while enabling you to rebuild your financial status far sooner.
BankruptcyCanada’s financial advisors and trustees can help you discuss all potential pathways.
The most likely solutions are as follows:
Managing multiple creditor accounts and monthly repayment plans isn’t only a major source of stress; it is often the catalyst behind a loss of financial control.
Debt consolidation is a process that helps to organize your financial obligations and can actively reduce the interest payments to support a faster (and cheaper) path to clearing the accounts.
Consolidation loans are an option, but can be risky while it’s likely that you either have been rejected or would be rejected upon making an application.
A better solution, then, is to consolidate your monthly repayments courtesy of a credit counseling organization like BankruptcyCanada.com.
Debt Management Programs focus on consolidating monthly payments without applying for additional credit and can deliver a range of benefits, including:
- Turn multiple creditor accounts into one easily managed monthly repayment plan.
- Secure big savings by getting creditors to waiver interest rates, meaning you only pay the product cost.
- Establish a repayment plan that leaves you enough money to still live your life.
Debt consolidation is a great option for individuals seeking a repayment plan that is easy to follow, not least because the implications for your credit score are far smaller than filing for bankruptcy.
Consumer Proposals are another increasingly popular alternative for debtors in Calgary and the wider Alberta region.
They are facilitated by a licensed insolvency trustee, and work on the principle of negotiating new repayment terms with creditors.
They are preferred to bankruptcy for several reasons, including but not limited to:
- The consumer proposal stays on your credit history for two years, compared to seven years for bankruptcy.
- Consumer proposals can freeze interest payments while additionally cutting the standard repayments by up to 70%.
- Individuals usually retain assets such as vehicles and properties, as well as their registered retirement savings plan (RRSP) deals.
Like bankruptcy, consumer proposals in Calgary are limited to unsecured debts.
However, creditors are often willing to accept the reduced repayments as it is a better solution for them than having to write off bad debt due to a bankruptcy hearing that would free you from those debts.
Essentially, creditors receive a partial repayment, and you gain the benefits of avoiding bankruptcy while still reducing your financial obligations to a manageable level.
The consumer proposal is a legally binding contract, meaning creditors cannot go back on it.
A trustee will complete the negotiations on your behalf until 50% of all debts have accepted the new terms – at this stage, all other creditors are obligated to accept the proposal too.
Debt Settlement is ultimately a process that focuses on offering creditors a one-off sum to become discharged from the rest of the repayment.
This is a particularly good option when your outgoings outweigh your monthly revenue, especially if you can accumulate the funds for the one-off payment.
Given that you’d have to pay $1,800 to file for bankruptcy, you already have a strong platform to build upon.
Once the debts have been settled, the significant reduction in monthly outgoings can allow you to rebuild your savings far sooner.
Some of the other incentives to choose this over bankruptcy include:
- Save yourself from the seven years of credit score damage.
- Cut the overall payment by somewhere between 20% and 80%.
- Allow yourself to start a new chapter with immediate results.
There are potential drawbacks, such as the fact that creditors can continue to harass you throughout the period of saving.
If you can handle this, though, debt settlement could be a great way to clear your debts.
Which Debt Relief Plan Is Right For You?
When looking at debt relief plans in Calgary, it’s imperative that you make the best decision for your immediate and long-term future.
With over two decades of experience in which we’ve helped over 200,000 Canadians with their financial problems, BankruptcyCanada’s extensive knowledge and impartial advice will put you on the road to financial recovery.
Take the first steps by getting in touch to arrange a consultation today.