What Options Are Available Before Bankruptcy Or A Consumer Proposal?

Navigating the Maze: Exploring Alternatives Before Resorting to Bankruptcy or a Consumer Proposal

When grappling with overwhelming debt, individuals often feel cornered, imagining that their only viable options are either filing for bankruptcy or considering a consumer proposal. However, this is far from the truth. As a Licensed Insolvency Trustee (LIT), our duty extends beyond steering you towards these two options. We are here to help you explore all potential avenues that can lead you out of debt, allowing you to make a well-informed decision based on your individual circumstances.

Freedom of Choice: Your Prerogative

The first step towards financial recovery is to understand that you have multiple choices. Never feel coerced into taking a decision that doesn’t align with your comfort zone, especially when dealing with the emotional burden of debt. Let’s delve into some of the alternatives that an LIT can help you investigate during a Free Confidential Consultation.

The Power of Inaction

Technically, one of your options is to do nothing. However, this is far from being a recommended path. Ignoring your debt will not make it disappear; instead, it will likely exacerbate the situation.

Creditors have developed efficient mechanisms to ensure you pay what you owe. If you choose to remain inactive, expect incessant calls from collection agencies, intimidating letters, and even a court order that could lead to wage garnishment, property repossession, or a lien against your home. Your credit score will also continue to plummet until you address the debt issue.

Liquidating Assets: A Possible Solution

Selling off your assets to clear debts is another alternative. However, the Bankruptcy and Insolvency Act has specific provisions to safeguard parts of your property in case you file for bankruptcy or a consumer proposal. Therefore, always consult an LIT before deciding to liquidate your assets.

Real Estate

In bankruptcy, asset exemptions may safeguard a considerable portion of your home’s primary value. You should also check how much available equity you have. If it’s enough to remortgage, you might be able to clear your debts without having to sell.


If your debt is relatively small, you might consider using some of your investments to avoid bankruptcy. But remember that RRSPs are exempt from seizure in a bankruptcy, except for contributions made in the last 12 months.

Before you decide to sell any assets, consult an LIT. They can help you weigh the costs, benefits, and other opportunities to ensure the best long-term outcome.

Borrowing More Money: A Counterintuitive Approach

Borrowing more money when you’re already in debt can seem like a paradox. However, there are valid reasons to consider this option.

Consolidation Loans

If the interest rate is low and the payment terms align with your lifestyle and budget, consolidation loans can help mitigate your debt problems. This solution involves combining high-interest debts from multiple creditors into a single, less expensive monthly payment with longer payment terms.

Family and Friends

Borrowing money from family and friends is another possible avenue. They may be willing to extend a personal loan with better repayment terms than other creditors or financial institutions. If you already owe them money, they might even be willing to forgive all or a portion of the debt.

Steering Clear of “Debt Management” Companies

Beware of companies claiming to manage your debt. They often promise to negotiate with your creditors and significantly reduce your debt, claiming to help you avoid bankruptcy. However, they are not licensed or regulated by the federal government and have no legal authority to fulfill their claims.

Do Your Homework

Remember, not all debt settlement companies are the same. If you choose to engage with one, do extensive research and understand what you’re signing up for before committing to anything. LITs can determine if a debt management program is right for you and refer you to a reputable, regulated organization that will provide accurate information and advice.

Navigating Your Options

As LITs, we are well-versed with the intricacies of the debt world. We offer a no-obligation Free Confidential Consultation to every debtor to gather the facts and numbers of your unique situation.

While a Life-Changing Debt Solution, such as a Consumer Proposal or Bankruptcy, might be beneficial for you, we will also consider if alternative solutions are feasible.

The final decision is yours to make. We’re here to help you chart the course and plan the most comfortable and efficient path possible. Begin your debt-free journey today.

Find Your Personal Debt Relief Solution

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