What Debt Solutions Are Available in Canada?
According to a recent survey published in November 2019 by the Manulife Bank of Canada, 2 in 5 Canadians don’t expect to escape debt in their lifetime.
What is equally worrying is the fact that almost half of respondents, 45%, say their spending has increased faster than their income, which puts them in a weak financial spot to make payments on time.
As a result, 55% of Canadians record high unsecured debts that they don’t know how to repay.
For memory, unsecured debt is a debt that is not associated with a tangible asset, unlike a mortgage loan, for instance.
Without an asset playing the role of a security guarantee, creditors can’t repossess any collateral as repayment.
Over 9 in 10 Canadians believe that the financial situation is dire and that the average household has far too much debt at any given time.
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If the debt survey hits a nerve, be assured that there are suitable Canadian debt solutions to help you sort out your situation.
BankruptcyCanada counts over 430 trustee offices all over the country to help Canada’s residents to become debt-free.
What to look for in debt solutions?
When you are in a position where you need to find debt solutions to manage your finances, your first priority is to find advisors you can trust.
Dealing with debts is a stressful event that can affect your mental health, personal relationship, and career.
The last thing you need is for a debt counsellor to make you feel uncomfortable.
You need someone who is compassionate and sympathetic about your situation.
You are already going through a lot of stress; there is no need for additional judgment or comment about it.
A compassionate advisor who can provide confidential, objective, and trustworthy debt solutions advice; this is the promise that Bankruptcy Canada licensed insolvency trustees make to you.
It is essential to be aware of disreputable debt management companies that can request payment on your first meeting, even though they can’t provide any guarantee of success.
Your first-time consultation with a trustee is free of charge.
Besides, there is no surprise cost with a trustee, as the government regulates all fees.
Debt consolidation solutions
Debt solutions can offer to consolidate your debts into one umbrella payment can help you repay 100% of the money you owe.
Consolidating debt is suitable for individuals who need a little financial breathing room to manage repayment more effectively.
Which debt consolidation solution is right for you depends on a variety of factors, such as:
- Your household income;
- Your assets;
- The amount you owe;
- Your credit rating.
Debt consolidation loans, for instance, will be determined by a bank or a consolidation company.
The loan repays all your creditors at once while letting you repay for the loan in manageable monthly payments.
The advantage of consolidation loans lies in the interest rate.
The loan has a lower interest rate than you would otherwise get if you were repaying your creditors directly.
The decreased interest rate can be enough to provide financial structure for the repayment.
Unfortunately, not everyone can qualify for a debt consolidation loan.
Banks prefer applicants with a high income, good credit rating, and assets that can be used as collaterals.
On the other hand, if you don’t qualify for a debt consolidation loan, the credit counselling debt management program offers a similar consolidation service.
You can use the program to combine all your debts under one monthly payment.
Your credit counsellor will negotiate with creditors to waive your interest so that the repayment becomes more manageable.
However, you are still expected to repay the debt in full.
Debt settlement solutions
If you can’t afford to repay your debt in full, a debt settlement solution is a suitable option.
In principle, debt settlement programs allow you to settle your debt with your creditors for an amount inferior to what you owe.
It can be tricky to negotiate a debt reduction, but most creditors are open to considering receiving less than expected if they know that it remains the best option for them.
Debt settlement can be negotiated by a debt settlement company or by yourself.
You will need to approach every single creditor to come to individual agreements, whether you choose to offer a lump sum early or propose a new payment plan.
Legally regulated debt relief programs
If you can’t afford to settle your debts, you can consider debt solutions that enable you to obtain debt forgiveness.
Debt relief program can be administered by a licensed insolvency trustee, who creates a legally-binding agreement.
Depending on your situation, the trustee can recommend either of the following debt cancellation plans:
- Consumer proposal
- Personal bankruptcy
Only a trustee can administer these programs due to their legal nature.
As soon as you file the agreement, all creditors’ actions are stopped, including lawsuits in progress and collection agencies.
With a consumer proposal, you repay a small portion of your debts over up to 5 years, after which the debt is forgiven.
When you file for bankruptcy, you only need to pay the bankruptcy cost, which can be paid in 9 months or more.
Here too, the debt is forgiven once the payment is made.
What’s the right debt solution for me?
Many different debt solutions are available for all types of situations.
For some people, receiving financial tips and guidance can be enough to manage their debts and rebuild financial stability.
For others, more extensive Canadian debt solutions, from accredited trustees or financial experts, can provide the debt relief they need.
At the heart of finding the right debt solutions, you need to assess your financial situation carefully.
That’s precisely what BankruptcyCanada trustees can do for you.
You can get in touch with a trustee on our website to find an office local to you.
With over 430 trustee offices all over Canada, you are guaranteed to find someone who can help you get out of debt.
We’ve helped over 200,000 Canadians in over 20 years of existence.
The bottom line: You can rely on trustees to deal with your debt, whether you can afford to repay them in full, partially, or not at all.
Give yourself a debt-free future today by reaching out to your local licensed insolvency trustee.
The right debt solution is just one phone call away: (877) 879-4770.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
How to File for Bankruptcy
What is Bankruptcy?
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?