Get Out of Debt Without Going Bankrupt: We Are Here to Help

For almost two decades, the team at BankruptcyCanada has made it our goal to help many people and businesses escape Bankruptcy. We hope that you will contact us before you make that call. It may seem complicated, but several alternatives to Bankruptcy exist and are available to you. It starts with getting in touch with us to evaluate your case and lay out your best possible choices. Despite popular belief, your options are likely to be significantly simpler than Bankruptcy itself.

What is Bankruptcy?

Bankruptcy is a legal proceeding initiated when an individual or a business is entirely unable to pay their outstanding debts. It begins with a petition filed most commonly by the debtor. It may also be filed on behalf of the creditor, though this is rare. Filing bankruptcy is a matter of personal circumstances.

Who is Bankrupt?

To consider filing for Bankruptcy, you must meet the following requirements:  

1. Owe at least $1000 in unsecured debt,
2. You are entirely unable to pay your debts when they are due,
3. You live, work, run a business, or own property in Canada.This is not restricted to Canadian citizens,
4. You owe more than you own.This is to say the value of your assets is lower than that of your debt.

  Prevention is better than cure! The first thing you can do to avoid Bankruptcy or a bankruptcy alternative as a debt relief vehicle is by becoming aware of the most prominent causes of debt in Canada.   ●     Uncontrolled spending is the number one cause of Bankruptcy. It is important for you to use credit wisely and ensure that you are making more money than you are spending. Many lifestyle habits can end you in trouble sooner rather than later. Make a monthly or weekly budget and stick to it. Get used to mostly spending on what you need as opposed to what you want.   ●     Separation and divorce are other causes of Bankruptcy. This is because, in the event that you separate with your partner, numerous expenses creep in. Besides the likelihood of having to cater to two households instead of one, there are also legal costs to factor in. According to a recent study, separation and divorce account for up to 14% of all bankruptcies.   ●     Job loss or income-reduction can have you over your head when it comes to debt. Even though there has been a steady decline in the unemployment rate over the decade (2009-2020) in Canada, you may still be affected by job loss or income reduction as the economy ebbs and flows.   ●     Unexpected illnesses are a double-edged sword. Despite the availability of universal healthcare in Canada, it is often overlooked that sickness can cause one to lose their source of income. More so, an illness may lead to hidden costs like home care in some instances. Here at BankruptcyCanada, we aim to help you avoid this situation by taking you through all possible bankruptcy alternatives. It is estimated that more than half of Canadians are $200 away from insolvency, and most come to regret the excessive debt they have taken on. Before you pull the plug and file for Bankruptcy, look at all available options, contact us for assistance. We can help you decide which one or combination of options will work best for your individual needs.

What are the Available Alternatives?

1.You can opt to give your debt some time.

This is sometimes your best option for two main reasons. First, you can keep your options open and make the best plan for your financial needs. Secondly, in most cases, time is the only cure for financial struggles. If your creditor has not sued you, you can take this approach as a bankruptcy alternative. This would involve:  

• Making small payments on out-of-control student loans;
• You can make progress in your debt to the government by making payments every month to the best of your ability;
• Making payments and taking care of the things you ultimately need;
• And finally, NOT making payments on selected debts like credit cards.

 

2. You can repay your debt through personal budgeting.

This, however, requires a very high level of discipline and commitment.  

• First, you will need to figure out how much you owe and how much money you have leftover after your basic needs.In some cases, individuals are simply unable to afford debt repayments, and this may not be an option;
• When you are sure of how much you can spend on debt repayment, it’s time to make a debt repayment plan.Our network of members can help you with that.

 

3. You can refinance what you owe with a debt consolidation loan.

• What this does is combine several debts accrued, such as credit cards and bank loans into one single loan.If you qualify, this money is used to repay your debts.This means that you can simply pay the consolidation loan, which tends to have much lower interest rates than most debts.In turn, you will be able to reduce your monthly interest costs and lengthen the loan term to lower your monthly payments.

 

 4. A debt management plan

A debt management plan for repayment can be organized for you by a non-profit credit counselling agency. You can, therefore, consolidate monthly debts without having to qualify for a new loan.

• This option is ideal if you have a few small debts that you want to consolidate; or if you have bad credit and do not qualify for a consolidation loan.

 

5. You can negotiate an informal settlement directly with your creditor

• If your debt is fairly old, you may be able to settle it directly with your creditor for a percentage of the total amount.Some creditors will accept a repayment of 50% or even less of your overall debt.

 

6. Debt elimination through a Consumer Proposal.

There has been a significant rise in the number of individuals filing for Consumer Proposals requiring debt relief. According to the Office of the Superintendent of Bankruptcy, almost 50% of bankruptcies filed in 2015 were Consumer Proposals. This is because:

• Filing a Consumer Proposal protects you from your creditors.Once filed, all wage garnishments stop, and you are protected from asset seizure, unlike filing for Bankruptcy;
• You can keep all of your assets.A huge fear while filing Bankruptcy is home-loss;
• Since this proposal is designed specifically for you, payments must be commensurate to your ability to pay and your income;
• Filing this proposal has no directly associated costs like filing fees, administrative or consultation fees beyond the proposal payments;
• It is open to anyone with a debt of between $1000 and $250,000, only excluding mortgage;
• Finally, a Consumer proposal is much simpler to file than Bankruptcy, which has a higher level of legal complexity and involves a larger volume of mandatory documents.

 

 Keep in Mind…

All of these options begin with you downloading a Debt Profile worksheet and filling it out as accurately as possible. Your debt profile will show us which alternatives are available to you as well as pointing out the optimal alternative for you. However, it is important to note the following when researching alternatives to Bankruptcy:  

• Credit counselling is only available in cases of unsecured consumer debt.
• Most alternatives listed above will not have any effect on your secured debt.
• You must include all unsecured debt in your consumer proposal, including your student loans, and money owed to the government.
• You can clear your student loans under a consumer proposal if you graduated or ceased attending school more than seven years before filing.
• In case you have been sued, it is best to seek out a Consumer Proposal.This can help you avoid wage garnishments or having liens being placed on your property.A lien is the right to keep possession of property belonging to someone who is indebted to you until the said debt is paid.The person in debt, who grants the lien, is known as the Lienee, while the one who holds the property for debt is called the Lienor.
• Consumer Proposals are limited to settling unsecured consumer debt and, potentially, some student loans.

  Our network of Local Bankruptcy Trustees across Canada is dedicated to providing information and advice. Our mission is to find a solution to your debt whether it is bankruptcy or any of the available bankruptcy alternatives. We are 100% Canadian, trained, and thoroughly experienced, and the federal government licenses all our members. We specialize in personal Bankruptcy and consumer proposals.