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Alternatives to Bankruptcy in Canada
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By eHow Contributing Writer
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The bankruptcy process in Canada can be a lengthy one. It can take at least nine months to be discharged in a bankruptcy case. But there are alternatives for those that carry debt in Canada, including a consumer negotiation option that allows debtors to try and get their creditors to agree to a partial repayment of debt outside of bankruptcy court.
Better Money Management
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Experts at bankruptcy-canada.ca say that a simple change in spending habits can help someone avoid bankruptcy. List your monthly expenses and look for ways to cut expenses, including non-essential items. Also look for ways to generate more income. Take the excess savings and pass it on to your creditors.
Debt Consolidation Loan
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By taking out a debt consolidation loan, you can take your unsecured debt and get one loan to pay it off. Yes, there is a loan to repay and terms may be longer than you want. But, chances are it will come with a lower interest rate, which will allow you to save money in the long run.
Debt Management Plan
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In Canada you can see a credit counselor and talk about money management skills. Additionally, this counselor could help you get into a debt management plan--the American equivalent of debt consolidation--that would also allow you to make one monthly payment to all of your unsecured creditors by combining the debt. The typical debt management plan takes four years to complete and usually offers a lower interest rate on the combined amount owed.
Consumer Proposal
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The consumer proposal is helpful if you can't qualify for debt consolidation. You must have unsecured debt of $5,000 to $75,000 and must have the means to pay some of it off, but not all of it. If your proposal to your creditors is approved, you can repay part or all of the debt, stop interest accumulation, put together a five-year payment plan and stop collection activities. It's similar to a Chapter 13 bankruptcy plan in the United States, except the consumer proposes the plan to his creditors outside of bankruptcy court.
eHow Article: Alternatives to Bankruptcy in Canada
