If you’re in debt and the word “bankruptcy” keeps popping into your head, you might already be thinking about the stress and uncertainty that goes with it.

You wouldn’t be alone.

Canadians across the country have been drowning in debt in recent years, and the COVID-19 pandemic has caused Canada’s unemployment rate to spike to over 13%, so more people than ever are likely experiencing hardships. 

However, being in debt when you’re trying to recover from an illness or injury can be even scarier and more overwhelming. 

The last thing you want to have to worry about is losing your home or other assets.

Additionally, you may not be able to afford the payments due when you file bankruptcy. 

Thankfully, there is another option, and you don’t have to go through the process on your own. 

Filing a Consumer Proposal

Instead of automatically turning to bankruptcy, talk to a Licensed Insolvency Trustee (LIT) to determine if a Consumer Proposal is a viable option for you. 

A Consumer Proposal allows your write up a “proposal” to your creditors, suggesting what you can pay and the terms surrounding it.

Once the proposal is submitted, your creditors can either accept it or deny it, though they are most often accepted because it ensures your creditors that they will at least be getting some of their money. 

To your benefit, a Consumer Proposal gives you flexibility.

You will agree with your creditors on how much of your debt you will be required to pay off.

In some cases, you may be able to wipe out 70-80% of your debt.

Then, you’ll decide on how much to pay each month.

As long as you make consistent payments, your creditors cannot come after you. 

You only need to owe $1,000 in debt in order to consider a Consumer Proposal.

It won’t disrupt your life the way bankruptcy will, which can be extremely important if you’re trying to recover from an illness.

Your main focus should be getting strong, and if you’re not able to work because of your illness, the last thing you want to do is worry about a mountain of debt or the potential dangers that come with bankruptcy. 

If you’re dealing with a health condition, illness, or injury and you’re worried about your debt, feel free to contact Bankruptcy Canada today.

You don’t have to deal with your debt alone.

One of our experienced Licensed Insolvency Trustees will be happy to work with you to determine your best options for getting out of debt and moving forward with your life so you can be healthy again. 

If you think it’s not possible to live debt-free, think again!

Not only is it possible to live debt-free, but you can also do so while still enjoying more than just the bare necessities. 

Make a plan – then stick to it

The first step of action in reducing your debts to live debt-free is to make a plan, then stick to it.

The freedom of a debt-free life is rewarding, but it can be difficult at the beginning.

To start, list out all of your debts, including credit card debt, vehicle loans, payday loans, or money you owe to friends and family.

This may be one of the hardest parts of living debt-free; it can be overwhelming to see your debts all grouped together.

Next, look at which debts you might be able to downgrade.

While you will have required debts like a mortgage or rent, or vehicle loans, it doesn’t mean that you can’t downsize these debts.

If you’re living beyond your means, you’ll need to decrease your spending.

Should you have several high-interest credit card debts, consider looking into debt consolidation options. 

If this collection of debts is overwhelming, you may need to seek out a financial expert to get you on the right path towards a debt-free life. 

Create a Budget

Your next step is to create a budget.

Calculate your monthly income, and then directly compare your monthly debts to your monthly income.

Ideally, you should be looking at the last six months of spending since one month may not be the best example of how you normally spend money. 

After you’ve done this, make a list of needs along with how much they cost.

This should include housing costs, transportation, insurance, utilities, food, and medical costs.

Now, subtract your “needs” from your income.

How much is left?

This is how you should decide how much you put towards savings, how much you should be paying down your debt, and where you’ll be able to throw in a few “want” items.

If your current monthly debts are substantially higher than your monthly income, seek help.  

Pay down debt 

If you really seek the freedom of a debt-free life, you’ll need to pay down your debts fairly aggressively.

Each month, work to pay as much as you comfortably can on any high-interest loans or credit card debts.

If you’re making minimum payments on your credit cards, you’re primarily paying the interest, not the principal.

The more you can pay each month, the quicker the interest decreases as the principal does.

So, each month you pay more than the minimum, you’re also paying more of the principal.

This is why you should aim to pay down high-interest debts first, then work on smaller or lower-interest debts thereafter. 

Once you are able to stick to your budget and have paid off your debts, welcome to the debt-free life.

It is up to you whether you put money towards savings, which is advisable, or whether you loosen your budget slightly to put more “wants” back into your plan. 

When to seek help

If you look at your debt and realize it’s too far out of reach when you compare your ideal budget and your income, then you have a few options.

First, as mentioned earlier, you may want to consider downsizing, such as selling your expensive car to get rid of the expensive loan and opt for something a lot cheaper which you can easily pay each month.

The second option is to look for higher income, but that can take months to secure.

Thirdly, consider seeking outside professional help.

At Bankruptcy Canada, we can set you up with a financial professional for an initial assessment to see if you are a good candidate for informal options like debt consolidation, or more formal solutions like a consumer proposal to help eliminate some of your outstanding debt.  

We’ve all been there.

We’ve made an appointment to do something we dreaded like making a doctor appointment or a trip to the dentist, then when the day of the appointment actually arrived, we think about cancelling.

Sometimes, you might not even show up, even if it means you have to pay a cancellation or no-show fee. 

Meeting with a Licensed Insolvency Trustee or credit counselor holds the same weight for many people.

It’s one thing to make the appointment; it’s quite another to actually drive to the appointment and step into the office. 

Why is that though? 

Fear and stress are powerful; together they can create stories in your mind of things that could happen that are so far from the truth.

When anxiety gets the best of you, it can restrict all the positive options you may have to improve your life. 

So, what kind of fears are you facing?

Recently, one of our Trustees finally met with Maria.*

The word “finally” is used purposely here, because she had previously reached out to set an appointment with us 3 times over the last 6 weeks.

Each time her appointment was scheduled, she would all to “reschedule” the appointment the afternoon before her scheduled meeting. 

Finally, on the 4th visit, she stepped into the office.

Truth be told, nobody really expected her to come to the consultation.

This is not the first time that our Trustees have gone through this. 

When our Trustee greeted her, Maria looked on the verge of tears, so he grabbed her a cup of coffee.

Before our Trustee had even gotten back to his office with the coffee, Maria had spread out all her receipts and hand-scribbled notes from debt collectors on the desk.

Instead of diving right in though, the Trustee started talking about the fear of coming in.

Addressing her anxiety head-on seemed to alleviate some of the fear she had.

Within minutes, they’d talked about why she was so fearful of coming in.

“I just don’t want to live on the streets,” she had said at one point. 

Over the course of an hour, Maria’s body language changed from defeated to relieved.

Instead of fretting her next step, or how much she owed, she had a plan of action.

She had been convinced that the only way she would be able to resolve her debts was via a bankruptcy, but instead, she was able to negotiate with some of her creditors and resolve her debt in a less formal way.

In addition, she has a very tight budget while she pays down her debt.

She had been so afraid and overwhelmed of her finances that she had simply ignored them altogether. 

Does this sound like your story?

Are you more afraid of the unknown of meeting with a Trustee than your actual debt?

The hardest part is coming to your initial consultation.

Once you step through that office door though, you have someone to guide you through your debt and provide solutions that best fit your life.

Go ahead, make that appointment with us at Bankruptcy Canada.

We look forward to seeing you.


*name has been changed for confidentiality

So, you’ve defaulted on a consumer proposal by not paying three months’ worth of payments, and now you’re terrified that debt collectors will begin hounding you for the unpaid debts you owe them, along with the compounded interest since the consumer proposal was initially filed.

If that sounds like you, you do have options to potentially revive an annulled consumer proposal so that you can continue paying on the consumer proposal to help you avoid bankruptcy, and decrease the harassing calls of debt collectors. 

You need to act quickly by paying back the missed payments and contacting the administrator of your consumer proposal.

What is the process of reviving an annulled consumer proposal? 

In 2009, Canada approved a process for a revival of consumer proposals.

Essentially, the way to revive an annulled consumer proposal is for you (the debtor) to make all the missed payments up.

At that point, the administrator of the consumer proposal may deem is appropriate for your consumer proposal to continue and will automatically start the process to reinstate the legally-binding agreement. 

30-day window

Within thirty days of the annulment, the administrator of your consumer proposal will notify your creditors as well as the Office of the Superintendent of Bankruptcy that the consumer proposal will automatically be revived, unless a notice of objection is filed with the administrator.

This is the first step of the revival.

Objections and the court 

At this point, each of the creditors has 60 days to file an objection.

If a creditor files an objection with the administrator, they send a notice to the debtor, the Office of the Superintendent of Bankruptcy, and the creditors who did or did not file an objection.

This halts the automatic approval of the revival of an annulled consumer proposal.  

At this point, the court may still revive the consumer proposal if it deems it appropriate.

However, the court may choose to amend the proposal or may choose to annul the consumer proposal entirely.

If the court annulled the previous consumer proposals, creditors can continue their collection efforts to have their debts repaid. 

Without objections

Should no party object to the consumer proposal being revived, then you can continue making payments on the consumer proposal as you had previously been making.

Make sure that you do not miss any of these payments again, though.

This is a good time to sit down with your credit counselor to see if you can make amendments to your budget and to see how to live within your means. 

Debt relief is just a call away

If you have money problems and need help with your debt, and are interested in making sure you can pay back your consumer proposal in a timely fashion, contact one of our debt experts at Bankruptcy Canada today.

(Don’t let the name fool you; we’re experts on all types of debt relief services and solutions, not just Bankruptcy.)

Sign up for a no-obligation initial assessment today with one of our Licensed Insolvency Trustees and be on your way to a debt-free future.