April 24, 2019 | By: Gursh Singh

Debt Relief Options: Consolidation, Consumer Proposal, Bankruptcy

Money Management | Debt Consolidation

The debt crisis continues to grow in the Great White North. Today, Canadians owe $1.78 for every dollar they earn. Canadian household debt is on the rise. This includes credit cards and mortgage and non-mortgage loans. This is an increase of nearly 25% from just one decade ago! So how are Canadians tackling this overwhelming amount of debt? They’re going about it in a few different ways.

Debt Help Methods - 5 Debt Relief Options Canadians Seek Out on their Own

Seeing their finances spiraling out of control, some Canadians are simply trying to tackle their debt on their own by practicing better budgeting and paying down their debts using the snowball or avalanche debt help methods. This strategy works well if you have a steady income that exceeds the amount you owe, but for some Canadians this simply isn’t the reality. Loans are usually the first place people look, after asking family, friends and colleagues for help.

Debt Consolidation Loans to Pay Off Debt - You Need Good Credit for Certain Loans

Rather than paying back their debts individually, some Canadians are opting to take out a debt consolidation loan and use it to pay off debts. It’s important to know that the interest on loans can vary wildly, so borrowers need to do the math to make sure the rate is lower than that on their individual debts. For many Canadians in debt, loans may not be an option as a good credit score is required by most lenders. Another option is debt consolidation

Debt Consolidation Programs - Work with a Credit Counsellor to Reduce Debt

Unlike a loan, a Debt Consolidation Program involves working with a credit counsellor who will help you pay off all your debt over time. Counsellors put together a proposal which details what you’ll be expected to pay each month. They also negotiate with your creditors to eliminate or reduce interest. This lets you reduce debt much sooner than on your own (often in just 2-5 years). If you don’t want to be in a long-term program, a consumer proposal may be an option.

Avoid Bankruptcy with a Consumer Proposal if Your Other Options Won't Work for You

In 2017, 64,229 Canadians filed consumer proposals. So what exactly are they? For most people, a consumer proposal is a more attractive alternative to bankruptcy; however it is still considered a form of insolvency, which means you will have a searchable, permanent record filed on the Superintendent of Bankruptcy website. When you file for bankruptcy, you reach an agreement with creditors to only pay back a percentage of the debt you owe. The amount you pay is determined by your income and assets. However, unlike in a bankruptcy, you get to keep your assets when you do a consumer proposal. This is especially important for homeowners and anyone else with significant assets. If you don’t qualify for a consumer proposal, then bankruptcy may be your last option.

Bankruptcy - The Last Option to Help You Resolve Your Debts

When all other options have been exhausted, some Canadians are turning to bankruptcy. In 2017, nearly 58,000 Canadians filed for bankruptcy. This number is quite high, but there is good news for you. You may not have to go bankrupt.

Bankruptcy is one of those things that should not be taken lightly. It can haunt you for years, damage your credit score and make it nearly impossible to get a loan, credit, a mortgage, and possibly certain jobs. It can also affect your assets because in a bankruptcy you’re effectively surrendering your assets for the elimination of your debts. It can be hard to know if bankruptcy or another option is right for you. Contact us for help.

Contact Us for Help Reviewing Your Debt Relief Options Today

Everyone’s situation is unique, so it's best to contact a non-profit credit counselling agency for help. If you're not ready to speak with someone right now, check out our brief Debt Assessment Quiz (simply answer four easy questions) to see where you stand. Our quiz will also suggest some debt relief options that you can try. Of course, no major decisions should be made based on this quiz and speaking with a Credit counsellor is the next step.

Which of the debt relief options is right for you? Contact us for help and explain your quiz result to us. We will arrange for you to have a free, confidential appointment with one of our certified Credit Counsellors. We are Canada’s leading credit counselling agency and have helped thousands of Canadians. Call 1.800.267.2272. The only thing you have to lose is your debt.

Which debt relief options is right for you? Answer four quick questions to find out. Take the Debt Assessment Quiz.



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