In BC, filing a consumer proposal is the number one alternative to bankruptcy. This process allows you to come to an agreement with your creditors and reduce your total debt by up to 75% or more.
Top 6 Ways To Get Debt Relief in British Columbia
Are you feeling overwhelmed by mounting debt? Perhaps you’ve started missing your mortgage payments, or debt collection agencies are calling. Maybe you’re considering taking out payday loans to get you through to the end of the month.
The only way to recover and get debt relief is to make the decision to take action.
And the sooner you seek help, the more alternatives you may have available to you.
Here are the top six ways to get debt relief in British Columbia.
#1. Contact a Licensed Insolvency Trustee.
No matter how you go about resolving your financial difficulties, your first and best step is to contact a Licensed Insolvency Trustee.
These are the only professionals authorized and regulated by the Canadian government’s Office of the Superintendent of Bankruptcy to help you file a consumer proposal or bankruptcy.
And it’s not just insolvencies that trustees can help you with.
In your initial, free consultation, a trustee assesses your current financial situation and provides you with details of all the options for debt relief available to you.
You will receive personalized advice from these credentialed and qualified experts on the best alternative in your particular circumstances.
You’ll also get credit counseling to help you understand how you got into financial trouble in the first place, and how to eliminate – and stay out of – debt.
#2. Create and implement a manageable budget.
Many of us don’t bother to track where our money goes, let alone put in place a budget to ensure we’re not spending more than we earn.
In some cases, once you see where your income is actually going, it can be easy to make adjustments to your lifestyle that will keep you out of debt.
Having a budget in place will help you and your family manage your monthly household expenses.
But budgeting isn’t a skill that everyone has.
If you aren’t comfortable creating one yourself, a trustee can help you figure out what your living expenses are and what you owe, and create a financial plan that will work for you so that you can repay your creditors.
Another bonus is that by following a budget, you’ll be more likely to stay out of future debt.
#3. Consolidate your debt or enter into a debt management plan.
Debt consolidation is a good option if you can qualify for a debt consolidation loan. Essentially, this means putting your debts together into one new loan so that you can focus on making just one affordable payment every month.
If you can’t qualify for a debt consolidation loan, a debt management plan may work for you. In this case, a credit counseling agency will negotiate with your creditors to reduce the interest you’re paying on your debts. Again, you’ll have one affordable monthly payment to make.
For both of these options, you would need to pay back 100% of the debt you owe. But the idea is that you are able to manage repayment to creditors, and save on interest.
Keep in mind that unlike a consumer proposal or bankruptcy, neither of these options is a legal procedure that is binding on your creditors. What’s more, they won’t stop any garnishments unless your creditor agrees to lift a garnishment in place.
#4. Settle your debt.
By negotiating with your creditors about the terms of your debt, such as payment schedules, interest rates, and so on, you can attempt to settle the debt with your creditor so that you can repay it.
Again, as with debt consolidation, this is not a legal procedure and it will not protect you from creditors enforcing their collection powers against you. You must also deal with each creditor individually rather than as a consolidated group.
#5. File a consumer proposal.
Consumer proposals are usually the last step debtors take before filing for bankruptcy.
They are most appropriate for debtors who:
Owe less than $250,000 (excluding a home mortgage);
Cannot repay loans in full; and
Have a stable source of income.
In order to file a consumer proposal, you’ll need the assistance of a trustee.
Trustees negotiate what you owe with your creditors in an effort to reduce that amount and consolidate it into a monthly payment you can manage. In some cases, your debt can be reduced by up to 80%.
You will only need 51% of your creditors (calculated by dollar value) voting in favour of the proposal in order for it to be accepted and legally binding on all your creditors.
One of the major benefits of a consumer proposal is that once you file, all collection efforts against you – including garnishments – stop immediately. You will also ultimately be paying less than the full debt you owe.
Finally, while a proposal does affect your credit rating, it has less of an impact on it than a bankruptcy.
#6. File for bankruptcy.
Like a consumer proposal, in order to file for bankruptcy, you’ll need the assistance of a trustee.
Bankruptcy gives you the fresh start you need by discharging most of your debts. This means that once your bankruptcy is complete, you don’t have to pay those debts back at all.
It also provides you protection from the collection efforts of your creditors, including garnishments. Once you file, all creditors must cease their attempts to get you to repay.
However, filing for bankruptcy is not a decision to be taken lightly. There’s good reason it’s considered a debtor’s last resort.
Bankruptcy has the most severe impact on your credit rating, which might make it more difficult for you to obtain credit in the future.
What’s more, not all your debts will be discharged. Among others, debts that remain after your bankruptcy include secured debts, court imposed fines, student loans less than 7 years old, and child and alimony payments.
Get Debt Relief Help In BC Today
As you can see, there isn’t just one way to get debt relief. Your best option really depends on your particular situation. And remember, the sooner you seek help, the more options you’ll likely have available to you.
Whether you are just having trouble making ends meet, or want to put an end to garnishments and incessant collection calls, contact us today and get started on your journey to better financial health.