Debts

When you can’t pay your bills

If you can’t pay your bills, you are not alone. Almost everyone reaches this point at one time or another. Like most of them, you may think the only way out in Canada is bankruptcy. Alternatives are available, and this page outlines your options for you.

Non-payment is a non-option!

You may feel so overwhelmed enough that you just try to carry on without paying. This will only make matters worse:

• One payment missed: IF you have a good borrowing history, your creditors may simply send you a polite reminder letter.
• Two payments missed: You will get a strongly worded letter, and possibly also a phone call, demanding payment.
• Three payments missed: Each creditor will enlist a Collection Agency to press you for payment. Collection agencies will make your life unpleasant, using a variety of tactics to get the money, including threats.
• If you still don’t pay, stronger methods can be used against you.

Your best bet to make things better is to act immediately. Let us help you choose your best solution.

But I can’t pay my bills! Do I have any alternatives?

Yes! The good news is that, of several bankruptcy alternatives in Canada, at least one would probably be right for you. Imagine stopping those harassing calls and letters!

Here are your main options, in order of priority:

1. Learn better money management

Create a budget, by listing all your monthly income and expenses. Analyze it to see if you can raise your income or lower your expenses. Use all the cash you free up to repay your debts.

Realize that a lot of what you are buying is not necessary. Don’t waste your money by giving in to impulse buying. Get rid of most of your credit cards as soon as you can pay them off.

Also, rebuild your credit rating, to get necessary credit more easily and at lower interest rates.

You can get free help with budgeting and other money management skills, from a professional credit counsellor.

2. Get a Debt Consolidation loan

Replace your unsecured debts with a single debt consolidation loan, with one monthly payment, a lower interest rate, and possibly a longer payment period. If, like most people, you have much of your unsecured debt in high interest credit cards, the lower interest cost will make it much easier to get back in the black.

3. See a credit counsellor and consider a Debt Management Plan

A credit counsellor can help you build money management skills, and may negotiate with your creditors to set up a debt management plan, with a single monthly payment and lower interest costs, spread over up to four years.

What is Bankruptcy?

The following debts are not covered by bankruptcy:

• fines
• alimony
• maintenance payments
• awards of damage, money owed on stolen items
• student loans if bankruptcy is filed within 10 years of the loan

Basic Steps in applying for BankruptcY

• Set up free confidential consultation with a trustee
• Sign the bankruptcy documents
• The trustee notifies the creditors
• Send budget, pay stubs and payments to the trustee each month
• Attend two financial counseling sessions
• The trustee recommends “absolute discharge”

For those people who have not been bankrupt before, an automatic discharge will take place after nine months if the creditors, Superintendent of Bankruptcy or trustee have not opposed your discharge and you have received counseling.

In the vast majority of cases the cost of a bankruptcy is regulated by the government and is less than $200 a month for each of nine months.

To declare Bankruptcy you must be at least $1000 in debt and must be unable to pay your bills as they are due. The average cost of Bankruptcy is around $1500, many companies will take monthly payments.