- Try to work through your debts on your own. Perhaps you can cut your expenses or get a second job,
- A debt consolidation loan is an option if you have good credit, or if you have a friend or family member willing to co-sign a debt consolidation loan. If you have equity in your house, you could get a second mortgage and use the loan to repay your higher interest rate credit cards, so you reduce the interest you are paying.
- If your debts are old, a debt settlement may be an option. In a debt settlement you offer to pay less than the full amount owing to your creditors. If the debts are already a year or more old, they may be willing to accept less than the full amount owing. A debt settlement is most successful if you can offer the settlement as a lump sum of money.
- If you don’t have a lump sum of money, credit counselling, or a debt management plan, may be an option. A not-for-profit credit counsellor will contact your creditors and work out a plan where you repay the debts in full, but generally at a reduced or zero interest rate. A debt management plan works well if you can afford to repay your debts in full, but need a break on the interest.
- If you can’t afford to repay the debts in full, a consumer proposal is another option. In a consumer proposal your consumer proposal administrator negotiates a payment plan where you pay back a portion of your debts, generally between one third and one half of what you owe. This allows you to get relief from your debts, but avoid bankruptcy.
Which option is right for you? Arrange a no-charge initial consultation with a Licensed Insolvency Trustee to review all of your options to avoid bankruptcy, and then make the decision on what’s right for you.