Bankruptcy Alternatives in Saskatchewan

Amid a growing national debt crisis, the number of people filing for insolvency in Saskatchewan continues to rise. As the financial impact of COVID-19 continues to deepen, residents are delving deeper into debt simply to try and make ends meet. Unfortunately, the increasing reliance on loans, credit cards and short-term borrowing mean that, inevitably, there will be a subsequent rise in the number of people filing for bankruptcy in Saskatchewan in the short to mid-term.

However, bankruptcy isn’t the only option for dealing with unmanageable debts. Although it can be a viable option for many people, there are many bankruptcy alternatives in Saskatchewan worth exploring. By learning more about debt management options, you can determine which course of action is right for you and begin to take control of your finances. To find out more, take a look at some of the bankruptcy alternatives in Saskatchewan now:

Debt Consolidation

If you have numerous debts, consolidating them into one loan may be a savvy way to reduce the amount you’re paying each month. A debt consolidation loan should have a lower interest rate than your existing debts, as this will cut the amount you need to repay in the long run. Although this won’t reduce the capital sum of what you owe, it can simplify the repayment process and minimize the amount of interest you’re paying.

Repayment Plans

When you’re having trouble making repayments, it’s important to talk to your creditors. Often, they will allow you to make a new repayment plan which reflects your current financial situation. Typically, this means reducing your monthly payments and extending the terms of your credit.

While this can free up some of your cash every month, the amount you owe in total could increase. When you make minimum repayments, the interest added on each month could exceed the amount you’re paying off, which means your debt could actually be increasing, rather than decreasing.

If you’re considering entering into a repayment plan, be sure to ask creditors to reduce, waive or suspend interest and charges on your accounts. This can make a real difference to the total amount you’ll need to pay back, so it’s always worth negotiating.

Debt Settlement

Depending on your current financial situation, you may be able to offer your creditors a settlement in lieu of total repayment. If you owe $1,000 dollars, for example, the creditor may accept a one-off payment of $400, rather than receiving $10 a month in minimum payments.

Although you can negotiate debt settlements yourself, it’s important to ensure that you understand the terms of the agreement. With help from established credit counsellors and debt organizations, you can ensure that any full and final settlement offers meet the relevant criteria and are no longer actionable.

Orderly Payment of Debt

Sometimes known as a consolidation order, an Orderly Payment of Debt is only available to residents in Alberta, Nova Scotia and Saskatchewan. An Orderly Payment of Debt involves asking the courts to help you make payments towards your debts. It’s a voluntary process, so it’s completely up to you whether you want to petition the courts for this assistance.

If you decide an Orderly Payment of Debt is the right option for you and the court agrees, it will issue an order that officially consolidates your debts. A consolidation order reduces the interest on your outstanding debt to 5%, which means your debts should now increase at a significantly lower rate than they were previously.

The order will also state how much the debtor (you) needs to pay in repayments and how often you’ll need to make payments. You will then make payments to the court in accordance with the order and the court will forward these to your creditors. The court decides how long the order is in place for, but an Orderly Payment of Debt generally runs for three years.

Consumer Proposal

As a form of insolvency, a consumer proposal is managed by a Licensed Insolvency Practitioner in the same way that a bankruptcy is. However, consumer proposals allow you to retain your assets while significantly reducing your unsecured debt. When you file a consumer proposal, collections actions must be stopped immediately, which means you won’t face on-going calls or communication from creditors and agencies. Furthermore, existing wage garnishments stop, and interest is suspended on your accounts.

Based on your income and financial obligations, you will offer your creditors reduced payments over a maximum period of 5 years. If the creditors that are owed the majority of your overall debt agree to your proposal, it becomes binding on any other creditors. As lenders generally don’t want debtors to become bankrupt, they accept a relatively high number of consumer proposals.

Once a proposal has been accepted, your monthly payments will remain the same for the length of the agreement, even if you come into money or start earning more. Although a consumer proposal doesn’t resolve issues concerning secured debt, it can be an effective and attractive way for people to resolve unsecured debt issues. In fact, more people filed a consumer proposal in Saskatchewan in 2019 than in the last decade. If early statistics are anything to go by, it appears that there will be even more people making consumer proposals in 2020.

What Bankruptcy Alternatives in Saskatchewan Are Right for You?

Dealing with debt problems can be tricky, particularly if you don’t know much about the various options available to you. When you’re struggling to pay your bills and make minimum repayments, it’s tempting to simply bury your head in the sand and avoid dealing with financial issues. However, facing your debt troubles head-on will enable you to resolve them more quickly and more effectively, and you don’t have to do it alone.

At Bankruptcy Canada, we’ve helped more than 200,000 people overcome debt problems since 2004 and we can help you too. To learn more about the debt solutions that are available to you, talk to a licensed insolvency trustee today on (877) 879-4770.