Best Bankruptcy Alternatives in Alberta

When faced with the burden of crippling debt, many Albertans turn their thoughts towards bankruptcy. Yet, declaring bankruptcy should always be the last resort. Bankruptcy Canada is committed to helping Albertans navigate through their financial difficulties. We often deal with clients who are grappling with substantial debts and are unable to meet their payment obligations.

While the initial reaction might be to choose the seemingly easy way out by filing for bankruptcy, there are several reasons why most Albertans prefer the Orderly Payment of Debts (OPD) program or other alternatives to bankruptcy. In this comprehensive guide, we will delve into some of the best bankruptcy alternatives in Alberta.

Exploring Options Beyond Bankruptcy

Alberta offers numerous practical debt relief options, but if you’re contemplating bankruptcy, chances are you feel overwhelmed. We have streamlined the process of assessing debt repayment alternatives by dividing them into formal and informal strategies.

In this guide, we will discuss:

We will also provide valuable insights on:

  • Reasons to Avoid Bankruptcy
  • Selecting the Optimal Bankruptcy Alternative

Let us start by examining the informal and formal best bankruptcy alternatives in Alberta.

Why Should Bankruptcy be Your Last Resort?

There are numerous reasons to steer clear of bankruptcy. The most common reason is the severe impact it can have on your credit score. A first-time bankruptcy stays on your credit report for six years from the discharge date. However, a second bankruptcy reappears on your record, and both instances remain for 14 years from their respective discharge dates. This can hinder your chances of being approved for credit or loans in the future, creating difficulties when you want to buy a house or a vehicle.

Furthermore, bankruptcy can lead to the liquidation of assets, including personal property such as your home. In rare cases, it may even result in the loss of a professional license, preventing you from continuing your chosen career.

Lastly, many clients express their moral obligation to repay what they borrowed. They appreciate the fixed 5% interest rate of the OPD program, which allows them to repay their debts in full.

Informal Bankruptcy Alternatives

Filing for bankruptcy entails significant consequences, such as staying on your credit report for six years and being listed on public records. Therefore, it’s crucial to review all your debt options, including informal bankruptcy alternatives that carry fewer consequences and offer more privacy.

Informal bankruptcy alternatives in Alberta include debt consolidation loans and debt management plans. These debt repayment strategies typically help you repay most or all of your debt at a lower interest rate without affecting your credit rating.

It’s important to note that you can discuss debt repayment plans with your creditors. However, some creditors might not agree to these arrangements, so it’s essential to ask about the repayment terms and potential consequences of restructuring your debt informally.

Debt Consolidation

Debt consolidation is a popular method of combining your debts into a single monthly payment. Often facilitated by your bank or financial institution, consolidation loans are a sound starting point before you consider more formal options. The interest rate of the consolidation loan is typically lower than that of your outstanding loans, which could save you money. However, it’s essential to be disciplined and avoid falling back into debt after paying off your consolidation loan.

Debt Management Plan

A debt management plan, or a debt management program, involves a credit counselor mediating between you and your creditors to devise a mutually beneficial solution. Like debt consolidation, this plan combines all your unsecured debts into a single monthly payment. However, it doesn’t include secured payments like mortgages or car payments, or government debts such as student loans and taxes. Though this agreement isn’t legally binding and may not be accepted by all creditors, it often comes with interest relief and a fixed five-year term.

If your debt situation is more complex, you may need to consider formal bankruptcy alternatives.

Formal Bankruptcy Alternatives

While informal bankruptcy alternatives may be a better option in some cases, formal alternatives aren’t necessarily less appealing. Each debt situation is unique, and the choice of a debt solution depends on various factors. Therefore, it’s essential to explore formal bankruptcy alternatives like the Orderly Payment of Debts program or a Consumer Proposal after reviewing informal options. These legal alternatives offer more protection throughout the process.

Orderly Payment of Debts Program

The OPD program, administered in Alberta by Bankruptcy Canada, is a court-ordered legal proceeding under the federal Bankruptcy & Insolvency Act and overseen by the Province of Alberta. With a fixed interest rate of 5%, the program is often seen as a stress-free method of consolidating all debts into a single monthly payment.

The OPD program stands out from other bankruptcy alternatives due to the high level of engagement from our unbiased, qualified credit counselors. We have received positive feedback from clients who appreciate the attention, connection, and compassion they receive from our team.

At Bankruptcy Canada, we aim to accompany you every step of the way in your debt repayment journey. Our primary goal is to help you become debt-free, but we also strive to help you build better habits, improve your financial literacy, and make lasting changes. That’s why paying off your debts is only part of what we offer. With us, you’ll have a dedicated credit counselor and access to a variety of financial literacy resources.

Consumer Proposal

A consumer proposal is a formal, legally binding agreement between a debtor and their creditors to settle the debt. Administered by a Licensed Insolvency Trustee (LIT), they work with you to develop a proposal, which is then voted on by the creditors. However, consumer proposals can be more expensive than other debt relief options like OPD.

Choosing the Best Bankruptcy Alternative

The primary bankruptcy alternatives include debt consolidation loans, debt management plans, consumer proposals, and the Orderly Payment of Debts program. The best alternative for you depends on your circumstances. To help you make an informed decision, you can book a free appointment with a non-profit credit counselor at BankruptcyCanada.

Our credit counselors are committed to providing advice tailored to your situation and weigh the pros and cons of each debt relief option. As a non-profit credit counseling agency managing the OPD program on behalf of the Government of Alberta, we offer unbiased advice to all Albertans. Therefore, our counselors consider all debt relief options and recommend the best one for our clients, regardless of whether it’s the OPD program or not.

Whether you need help with refinancing loans, strategies to pay down credit card debt, ways to pay off gambling debt, or cutting expenses, we’re here to support you on your financial journey.

To have a detailed conversation with one of our non-profit credit counselors, contact us today or schedule a free appointment.


If you need more information or want to speak to an accredited financial counselor, we’re here to help.

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