Options

A. OPTIONS THAT YOU CAN COMPLETE WITHOUT OUTSIDE PROFESSIONAL HELP.

These options include:

1. Increase earnings
   Some times a second job will allow the extra cash to cover the immediate creditor payments. Be careful that sufficient income taxes are deducted from the second job otherwise you may be trading a creditor problem for a tax problem.
2. Reduce living expenses
   This is applicable if you have the ability to generate additional income by reducing your expenses and using the extra cash to fund debt repayment in a relatively short period of time.
3. Do nothing. Read more.
4. Turn assets into cash
   The sale of some assets may be taxable and you will have to be sure to retain enough from the sale of the assets to pay the taxes owing on the sale. Prior to selling any assets you should consider if the asset will be available to your creditors. Your creditors may not be able to seize some of your assets. Read more.
5. Obtain a debt consolidation loan. Read more.
6. Make an informal arrangement with your creditors. Read more.
7. Use an outside party to collect monthly payments and distribute them to your creditors. They will deduct their fees prior to making the distribution. The fees are usually non-refundable and are more expensive than some of the other options. (Debt pooling). Read more.
8. Check with your employer to see if there is an employee assistance plan available to provide counselling for financial management.
9. Obtain credit counselling services from your local family or community association.

The personal options outlined above appear to be common sense and easy to incorporate but they are fraught with dangers and complications.

It is very difficult to negotiate with a number of creditors, each having their own agenda. As soon as creditors are able to sense that they may have an advantage over a debtor, they likely will try to take that advantage. Many creditors will hold out making any decision and try to make their settlement when they can negotiate a better deal.

People using these personal options often do not treat the creditors equally and run into trouble when their creditors find out that all creditors have not been treated equally.

Since there is no legislated time limits for completing these negotiation, they often drag on for some time. Financial pressures left unchecked can cause marital problems, problems at home, or at work . Your financial situation may be too complicated for you to resolve on your own.

Everyday we see people who have unsuccessfully attempted these options and have lost assets they didn't need to lose or made matters worse for themselves with their creditors.

In most cases, the best alternative for them involves protection under the Bankruptcy and Insolvency Act by making a consumer proposal or orderly payment of debts scheme to your unsecured creditors or by filing an Assignment in Bankruptcy.

B. OPTIONS THAT REQUIRE PROFESSIONAL ASSISTANCE

Background

The Canadian government has enacted laws to protect all Canadians from problems with their creditors.

Generally the purpose of all this legislation is:

The options that require professional assistance are:

1. Orderly Payment of Debts. Read more.
2. Proposal to Your Creditors. Read more.
3. Consumer Proposal. Read more.
4. Bankruptcy. Read more.

C. INFORMATION REQUIRED TO ASSESS OPTIONS AVAILABLE TO PEOPLE IN FINANCIAL DIFFICULTY.

We are prepared to discuss your situation on general terms so that you do not have to assemble all your numbers before we complete the initial assessment. Once an option is selected the following information may be required:

Once we have met with you, we will be able to provide you with an indication of the options that we believe should be considered by you for your situation. You will then have whatever time it takes you to decide what option is best for your situation.

We do not mind meeting with you more than once if you need clarification as to what was discussed at the initial meeting. In order for your financial reorganization to be a success you must understand the process and believe that it is the best alternative for you.

If you have any questions about what information is required, or how to gather the information, please call our offices

Cost of Debt Solutions

This chart shows the payments required to settle total unsecured debts of $15,000 by a single person earning $1,900 per month. It assumes that the individual has no assets that will be lost in a bankruptcy situation. It also assumes that there will be no non-discretionery payments such as alimony, child maintence, court fines or child care expenses. These types of payments increase the amount of income that an individual is allowed to earn before they have to make payments to their creditors.

(revised February 2007)