Alternative Debt Solutions

Credit Counselling

Credit counselling is a debt repayment option that involves a financial professional evaluating your finances and determining just how much you can actually afford to pay towards your debts. By helping you to fully understand your finances and budget, credit counselling can be beneficial to your overall money management abilities. Credit counselling can also help by consolidating your debts into one monthly payment, and possibly reducing the amount of interest you pay.

The downside with credit counselling is that you will still be required to pay the entirety of your original balance, even if your interest rates are reduced.

Consumer Proposal

A consumer proposal is a debt repayment option that allows you to consolidate your debts into one single, reduced monthly payment. A licensed trustee working on your behalf will present your creditors will a proposal to reduce your monthly payments. If accepted, your monthly payment will typically be 2% of the principle, allowing you to quickly achieve debt freedom.

To qualify for a consumer proposal, you must have between $5,000 and $250,000 of unsecured debt and be able to prove your insolvency. Once the plan has been agreed, you must maintain your payment schedule over the agreed time period, which is generally between three and five years. The potential downside to a consumer proposal is that you don't have the freedom to choose which debts are included in the plan, nor the payment schedule flexibility that you would get from a debt settlement program.

Bankruptcy

Declaring bankruptcy may seem like the best option for those struggling with debt, but doing so has a number of very serious consequences which should be carefully considered. Bankruptcy has a negative effect on your credit rating; your bankruptcy will stay on your credit file for up to seven years, making it difficult or impossible for you to buy a new home, automobile or access credit for other purposes.

Bankruptcy also requires you to appear in Federal Court at least once, and in most cases you will be required to appear in Court on multiple occasions. You will be required to reveal details of all of your debts and assets as part of the bankruptcy process. Finally, your bankruptcy filing will also be a matter of public record for anybody who wants to know about it.

Bankruptcy is a very serious option and is mostly considered to be a last resort option when all other repayment options have been ruled out.