Alternatives Available

Where you establish that there is a debt problem, the next logical step is to seek a viable solution. If you have a steady income, credit counselling services are available or you may wish to contact your creditors directly to explain your situation. Perhaps an arrangement can be made that benefits both of you.

Another possible solution is consolidating all of your debts into one loan. This can be done at a bank or any other financial institution. The bank pays off all of your debts, thereby leaving you with only one monthly payment to make. It is important not to make additional purchases on credit as this could make your debt load unmanageable.

A Proposal can be filed under the Bankruptcy and Insolvency Act if you are in a position to satisfy or partially satisfy your creditors given certain concessions being granted. The Proposal is a contract between you and your creditors negotiated with the assistance of the Trustee. Typical examples include paying a reduced amount on the dollar, postponing payments until a specified future date, or some combination of both. Because it is a contract, it can be as creative as need be to suite the circumstances. The creditors vote upon the settlement put forward, and if accepted, it is legally binding. However, the proposal must be more favourable to creditors than an outright bankruptcy would be. A Proposal should ultimately result in a somewhat more favourable credit rating.

If none of the above approaches is an appropriate solution to your debt problem, then you should consider personal bankruptcy.