Bankruptcy in Canada is a last resort, something you do when you have no other options. To avoid bankruptcy, you must evaluate all of your other options first, and if no other option will work for you then, and only then, should you consider bankruptcy.
But how do you do that? How do you know if you can avoid bankruptcy?
You do have options.
- Repaying your debts yourself. This may be an option if your debts are small and you think you can cut back on your expenses enough to repay your debts within a reasonable period of time. If you think this is possible, read our article about strategies to reduce your debt on your own. Remember however that missed payments have a negative impact on your credit report. If you are constantly getting behind, then you need to take more formal action.
- Getting a debt consolidation loan. You may be able to combine your unsecured debts into one single debt consolidation loan. This will work if you still have a reasonable credit history or you have assets you can use to secure the loan. This is only a good option if you are able to lower your interest rates and still pay off your debts within a few years.
- Try Credit Counselling or consider a Debt Management Plan (DMP). Under a Debt Management Plan your credit counsellor works with you to replace your multiple payments with one single monthly payment. Interest costs are often forgiven as part of the DMP however it is important to note that under this form of negotiation you are still required to pay back your debt in full.
- Make a proposal to your creditors. If your debts are so large that you are unable to repay them, but you still want to avoid bankruptcy, a Consumer Proposal is an excellent option. A bankruptcy trustee can make a proposal to your creditors to settle your debts for less than you owe. You make one, lower, monthly payment to your trustee (also called a consumer proposal administrator) usually over a period of 3 to 5 years. This option works well if you have a stable source of income or you
Since filing for bankruptcy is a serious decision, you should talk to a trustee about all of your alternatives to bankruptcy before you file.
Get help today. Talk to a bankruptcy trustee in your area to see how they can help eliminate your debt and avoid bankruptcy.
Read more articles on alternatives to bankruptcy in Canada.
Options to Avoid Bankruptcy in Canada: