Bankruptcy Alternatives in Quebec
As more Canadians report financial problems, an increasing number of people are looking for bankruptcy alternatives in Quebec. While bankruptcy can be a suitable form of debt resolution for many people, the consequences of filing for bankruptcy can put many people off using this form of debt management. Fortunately, there are a range of other options available.
Before you decide how to deal with your debts, it’s important to consider all of the bankruptcy alternatives in Quebec. Only once you know what your options are will you be able to make an informed decision about your financial future. To learn more now, take a look at some of the most popular bankruptcy alternatives in Quebec:
1. Credit Counselling
Credit counselling might be your first-choice method of debt management. Designed to educate you and help you to understand why your debts are escalating, taking part in credit counselling sessions can give you the knowledge and support you need to start making changes to your spending.
Working with a trained credit counsellor can be extremely beneficial when it comes to managing your finances. The information you’ll gain via these sessions can be used to help you implement other debt solutions. While credit counselling doesn’t reduce or eradicate your debts in itself, it does give you the expertise you need to resolve your debts. Furthermore, people who attend credit counselling sessions report feeling more confident about managing their finances in the future. This means they’re less likely to get into unmanageable debt again, which reduces the risk of financial mismanagement and stress.
2. Debt Consolidation
Consolidating your debts can be an effective way to manage your finances more effectively. By streamlining your financial obligations, it becomes easier to manage them and stay up to date. If you have more than one creditor, you’ll be making more than one repayment every month. As some people have upwards of 10-15 creditors, it’s easy to see why people get into a muddle when trying to pay their bills.
Taking out a debt consolidation loan simply means that you use the funds from the loan to pay off all of your existing creditors. Then, instead of having to make multiple payments to different creditors every month, you can make one, single repayment to your consolidation loan provider.
As you’ll have noticed, a debt consolidation loan doesn’t reduce the amount you need to repay. If you owe your creditors $50,000 in total, you’ll need a debt consolidation loan of the same amount.
However, choosing a debt consolidation loan with a lower interest rate than your existing debts can mean that you’ll pay less overall. As interest won’t be mounting up quite as quickly, debt consolidation can enable you to repay your debts at a lower rate than you would be able to under the existing terms of your agreements.
3. Voluntary Deposit Service
Voluntary deposit is a debt management option that’s only available in Quebec. Handled by the Court of Quebec, residents can register for the voluntary deposit service and pay a portion of their income to the court every month. The amount you need to pay will depend on your income and your dependents, so there’s no set monthly payment that applies to all registered participants.
Once the court has received your payment, it is distributed between your creditors. Voluntary deposit doesn’t lower the amount you owe, so you’ll need to continue making repayments until your debts are paid off. However, the voluntary deposit service does change the amount of interest that can be applied to your debts. When you’re registered with the service, your debts will be subject to a 5% annual interest rate. This is much lower than most types of unsecured debt, so the voluntary deposit service can technically reduce the total amount you’ll pay back.
Registering with the voluntary deposit service prevents creditors from seizing your assets or taking legal action against you. This ensures you’ll be able to continue paying back your debts, via the courts, without receiving continued communication from your creditors or agencies acting on their behalf.
4. Consumer Proposal
Individuals can file a personal consumer proposal if their total outstanding debts amount to $250,000 or less (excluding a mortgage on your home). When you file a consumer proposal in Quebec, you get to retain ownership of most of your property and can substantially reduce the amount you need to pay back.
While a consumer proposal can run for a maximum of five years, your monthly repayment and the overall amount you repay are generally significantly lower. Furthermore, filing a consumer proposal means you’ll simply need to make one payment to the court every month, rather than paying your creditors individually.
Although the technicalities of filing a personal consumer proposal can be complicated, the entire process is managed by a licensed insolvency trustee (LIT). This means you’ll have a professional you can seek guidance from, and you won’t have to handle your debt resolution alone. While you’ll take an active role in the process, your licensed insolvency trustee will communicate with your creditors and the court on your behalf.
As a form of insolvency, a consumer proposal does impact your credit rating. However, the ability to resolve your debts via a consumer proposal means you’ll the opportunity to rebuild your credit rating over time. In contrast, struggling with unmanageable debts could simply increase the amount of time it takes to become debt-free and decimate your credit rating in the process.
Learn More About Bankruptcy Alternatives in Quebec
Like most governmental processes and procedures, the rules relating to insolvency and debt are a little different in Quebec than across the rest of Canada. To ensure you make the right decision regarding your finances, it’s important to seek help and advice from a reputable source.
At Bankruptcy Canada, we’ve been helping people to resolve debt issues since 2004 and we can help you too. To learn more now, contact us on (877) 879-4770.