5 Options to Avoid Bankruptcy in Canada

Category: Avoid Bankruptcy (3) comments

avoid-bankruptcy-in-canadaFor most people filing bankruptcy in Canada should be a last resort, to be used only if all other options won’t work for you.  So how can you avoid bankruptcy in Canada?  You have five options:

  1. Try to work through your debts on your own.  Perhaps you can cut your expenses or get a second job,
  2. 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.
  3. 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.
  4. 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.
  5. 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.

Leave A Comment

  1. Tami

    I am looking for an alternative to doing bankruptcy. I have a large debt load which I am struggling to bring down. I have helped my son out and co signed for a house and a truck. I am need help to get my debt load down. If you can help me it would be great. Please let me know what information You need me to get.

    1. J. Douglas Hoyes

      Hi Tami. A consumer proposal may be an option for you. Please contact a Licensed Insolvency Trustee for a no charge initial consultation, and they will tell you what information they will need to assess your situation. They will want to know what you own, who you owe money to, and how much you earn each month to start the analysis.

  2. Whitney

    What happens if you owe resp asset to estate and you miss bankruptcy court and you are actively paying back debts and you’re not wanting to continue bankruptcy


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