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Non-Bankruptcy solutions

April 18, 2018

We have non-bankruptcy solutions for your debt problems. The most common of these is a consumer proposal. A consumer proposal is a statutory option that can be a great fit for some folks – check through previous blogs for more details.

Aside from a proposal there are other options available – the most important of these is to stay on top of your regular payments to your creditors. Sometimes, it is hard to do better than making minimum payments and if that is all you can manage so be it. But it is always better for you to pay debts down more aggressively.

The use of credit in Canada is going through the roof with no sign of abatement and that worries international bankers. Currently there are about 80,000,000 bank issued credit cards in circulation that’s about two-and-a-half for every man woman and child in the country. Canadians charge $4,347,900,000.00 on those cards each year. That number is roughly equal to half of the gross income of all Canadians.

Consolidating debt can be a great idea, but only if you are consolidating to reduce interest and to be able to get out of debt. Consolidation is not a good non-bankruptcy solution if the reason you are consolidating is simply to be positioned to acquire more new debt.

Using mortgage financing to consolidate debt can be equally a good and bad idea. When you add new debt to your mortgage you will pay compounding interest on both the existing mortgage and the new debt and that can be significantly costlier than developing an aggressive repayment strategy or filing a statutory solution.

Consolidations require that you have a good credit rating or own property with enough value that if you are unable to repay the lender they can sue and sell your property to get paid. But there are still options if you have poor credit and don’t own property.

Negotiating terms is a relative easy thing to do, as long as you keep the communication lines open, and can protect you from legal action to some extent. If you are doing your best to make regular payments, even if they are less than the minimums required by the creditor(s) the courts will be more sympathetic to you if you are eventually sued.

Small Claims Court has a protocol in place to attempt to mediate an agreement between the parties. The courts also have the power to allow or suspend post judgement interest in making payment arrangements between you and your creditors.

One of these options is to negotiate a settlement – negotiating a settlement is not very complicated and you can do it yourself, but you must remember a few basic steps. First make sure you have clear terms of settlement laying out what is expected of each party to the agreement and second make sure that the settlement agreement is signed by all parties prior to making any form of payment.

You will find that you are more likely to be able to settle debts that are statute barred than any other form of debts. To be statute barred in Ontario at least two years must have passed, since you made a regular payment on the account, without the creditor suing you. Because the credit has no legal recourse to sue or garnishee you it will be more open to settling the debt.

You will have more control over the amount you are offering when the debt is statute barred because the creditor’s options are so limited. Keep in mind that you should not expect to settle for nothing but the longer you hold out, sticking to your guns, the more likely the amount you offer will be agreed upon.

If you would like more information about non-bankruptcy solutions call our office and arrange a free consultation to see if one of these strategies would work for you.