Unmanageable Debt Is A Solvable Problem So Lets Discuss Solutions

There’s no denying the simple fact that many Canadians are struggling under the weight of a tough economy. If you’re like thousands of others across the country, you may have found yourself overwhelmed with the burden or unmanageable debt. Unsure of their options, some may feel that bankruptcy is their only option. While this may be the best option for some, that’s not always the case. In fact, in some provinces, including Alberta, approximately 55% of all people who are insolvent opt instead for filing Consumer Proposals. Here’s an overview of these options and how they work.

When you’re struggling with debt and looking for the right solution, there both are informal and formal options. Informal options are those that are not legislated, which you would generally manage on your own. This can include options such as selling assets, reworking your budget, consolidating your debt with a bank or informal settlements with your creditors. If you do decide to go the route of an informal debt solution, be sure to get any agreements in writing.

If you feel you’ve struggled to get out of debt on your own as long as you could, there are formal options. And it’s likely best to find out how these options work in your case, so you can make a fully informed decision surrounding all of the options available to you. Formal options are government legislated and are binding on your creditors.

A Consumer Proposal is a legislated process whereby you offer a plan of arrangement to your creditors, and a “proposal” to pay them a portion of their debt. Some proposals can be as low as 10 cents on the dollar with no interest. It all depends on your personal situation, your budget, what kind of assets you own and who you owe money to. Most times, your assets remain with you and are not touched in a Consumer Proposal. It’s important to know that in Canada only Licensed Insolvency Trustees can file Consumer Proposals. No other professional is licensed to do that.

A bankruptcy is another option which can offer you a fresh financial start. If you’re not able to offer a proposal or work with your creditors on your own, bankruptcy may be the most viable route for you. As with proposals, only Licensed Insolvency Trustees in Canada can file a bankruptcy for you. Many times, most of your assets are protected, it all depends on the province you live in and the value of the asset.

Both options will offer you the legal protection you need to stop your unsecured creditors from harassing you, stop most garnishees and finally put together a light at the end of the tunnel for what has surely been a very stressful time in your life. You will receive budgeting and money management counselling with both of these options, which will be a great tool to help you rebuild your credit and financial future going forward.

The best piece of advice I think I can give when you’re looking for options, is to recommend that you sit down with a Licensed Insolvency Trustee and find out how all of the options work, both formal & informal. The initial consultations are free and will allow you to make a decision that best meets the needs of your unique situation so you can get back on track to achieving a debt-free life!