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If you’re battling with debt or credit card bills that feel insurmountable, you may have noticed commercials for debt forgiveness programs. If so, you may be wondering what, if anything, you can do to resolve the situation. The good news is that there are two choices for debt forgiveness in Canada: one can forgive all of your debts totally, while the other can forgive some of them.
Both will assist you in reducing your debt to zero so that you can start fresh and take your life forward. Continue reading to find out more about your options for legal debt forgiveness and to find out which debt relief strategy might be best for you.
Only Two Legal Debt Forgiven Options Exist in Canada
First and foremost, you should be aware that there are only two ways to get debt forgiven: filing for bankruptcy or making a consumer proposal.
Advertisements from credit counselors and debt settlement firms can occasionally be deceptive. Consumers should be aware of:
- Government-related, government-subsidized, or government-supported debt payback plans or programs do not exist. Organizations that describe themselves as being affiliated with or a part of a government program are probably lying.
- Only those choices administered (exclusively) by Licensed Insolvency Trustees can free you from debt: Consumer Proposals, Division I Proposals, and Bankruptcy.
- You can only receive legal defense from creditors’ actions and stop them from pursuing you for unpaid debts from a Licensed Insolvency Trustee.
- Asking the simple question “Are you a Licensed Insolvency Trustee?” will ensure that you are engaging with a professional who can assist you with a lawful debt forgiveness plan.
It is unlawful for a business to assert that it can handle your bankruptcy or consumer proposal if they don’t have access to a Licensed Insolvency Trustee.
Debt Settlement Companies: Exercise Care
Companies that specialize in debt settlement offer to negotiate with your creditors on your behalf (for a charge) and often make a lump sum payment to your creditors to settle your debt for less than what you owe.
Some credit counselors provide this kind of assistance as well, although they often do not guarantee debt forgiveness. With debt management plans from credit counseling, you typically pay back 100% of what you owe (occasionally without interest), but the creditor does not agree to lower your debt.
With debt settlement, there are many things to be wary of, including the possibility of escalating creditor collection efforts and exorbitant fees. Be mindful of:
- This type of informal debt repayment (including credit counseling) is not a regulated industry, but there are some provincial regulations in place to help limit upfront fee charges and require agents to be licensed with Consumer Protection BC.
- Anyone who promises to increase your credit score quickly is deceiving you; it takes time to raise your credit score.
How Can I Get My Debt Forgiven and Relief?
You have access to a variety of debt relief choices that are neither “exclusive” nor require a recommendation. You can get in touch with a Licensed Insolvency Trustee directly at any time to ask questions, go over your choices, or work on a plan to get out of debt.
You must owe at least $1,000 and be unable to pay off all of your bills when they fall due in order to qualify for legal debt remedies. Together with your Licensed Insolvency Trustee, you will decide which course of action makes the most sense for you after taking into account your overall circumstances and needs. For instance, a Consumer Proposal with partial debt forgiveness may be a better option than bankruptcy with full debt forgiveness if you can afford to make some repayments toward your debt.
Personal Bankruptcy: Debt Forgiveness and Relief
A person can get debt relief through bankruptcy, and in many situations, all of their debts may be canceled. Bankruptcy often sounds much more frightening to people who don’t understand how it works than it actually is; for the majority of Canadians, the procedure is a private, simple affair.
Despite the fact that no one wants to declare bankruptcy, many people find themselves in this situation due to stress-inducing life events like job loss, divorce, illness, etc. These people often find peace in declaring bankruptcy and getting rid of the debt they have been battling with.
An individual who chooses bankruptcy for debt relief is allowed to:
- Get debt forgiveness for a variety of obligations, including but not limited to credit card, overdraft, tax, ICBC, payday, and student loans.
- Protect money and assets that could otherwise be taken by creditors.
- Stop the tension caused by excessive payments, never-ending bills, or collection efforts.
- Have a firm “debt-free date” and a fresh financial start that will enable you to achieve your future financial objectives and advance in your life.
Discover What to Expect After Bankruptcy
The majority of bankruptcies in Canada are “voluntary,” meaning that the debtor initiates and seeks out the bankruptcy process in order to deal with their debt.
- To file for bankruptcy or to have your financial situation declared bankrupt, you do not need the consent of your creditors.
- If you’re having trouble paying off your debt, you have the choice and authority to file for bankruptcy; no creditor can stop you.
- A Licensed Insolvency Trustee will be your point of contact if you want to file for personal bankruptcy in Canada. There is no need for a lawyer, and you are not permitted to “act as your own Trustee” in this procedure as they are the only professionals designated and authorised to do so.
- The cost of declaring bankruptcy is typically far lower than fully repaying your debts.
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