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Alternatives to bankruptcy


Explain why you are not able to make your payments and suggest an arrangement that could work for both you and your creditors. You just might be surprised to find that many creditors are willing to co-operate.


You can contact a bank or another financial institution to consolidate all your debts into one loan. This creditor pays  all your debts, and in return, you make one monthly payment to one creditor. Take the time to “shop” for your loan as interest rates may vary considerably. Avoid all purchases on credit. This could compromise your already fragile situation.


Under certain circumstances, we can or you yourself can work with your creditors to come up with a payment scheme that would allow you to reimburse your creditors, thus preserving your credit rating. This is similar to a consolidated loan except for the fact you have not made a loan   to reimburse your creditors.


If you live in BC, Alberta, Sask, Man, NS or PEI, you may apply to the courts for a certificated order. A consolidation order determines the amount and periodicity of payments to the court. The court will in turn pay your creditors. This section of the Bankruptcy and Insolvency Act (Section X) allows you to pay off your debts over a period of 3 years and protects you from seizure of salary or any other measure that could be imposed.


For residents in Quebec, voluntary deposit allows for a monthly payment based on your revenue and number of dependents. This payment is made to the court, who in turn pays your creditors. As long as payments are made, you are protected from seizure of salary and furniture. Register at the nearest courthouse in your local jurisdiction.


Pursuant to the BANKRUPTCY AND INSOLVENCY ACT, a trustee or an administrator makes a proposal to your creditors in which you pay only a part of your debts or  you can prolong the period of payment of your debts  or a combination of both. For this to work, the offer must benefit your creditors more than a bankruptcy.


  • «Consumer proposal»: : a person is eligible if their total debt, excluding the debt attributed to the main residence, does not exceed $250,000. The proposal cannot exceed a term of more than five years. If the proposal is not accepted by the creditors, the debtor does not automatically go bankrupt.
  • «Proposal »:There are no restrictions on what a person owes. If the creditors refuse the offer, the person is automaticallly bankrupt from the date of refusal by creditors or the court.

If these alternatives are not plausible and financial woes are crippling you, then bankruptcy may be the only way for a new start in life.

One of the main objectives of the banruptcy legislation is to provide a person, drowning in debt, the possibility to rid themselves of debt and start over again  : a new beginning.