Debt Settlement Services
In Calgary & Southern Alberta
What Are My Debt Settlement Options?
Dealing with debt can be stressful and confusing with so many mixed messages coming from all directions. We want to make sure that you have accurate information from reliable sources so that you can find a solution that makes sense for your financial situation.
First, it is important to know that there are many different organizations offering debt related services. Unfortunately, not all will have your best-interest in mind. On this page we want to provide information about different debt settlement options and who you can trust to be honest and transparent with the services they provide.
Where Should I Start?
A great first step to understanding ALL of the options that are available and how they will impact you is a free consultation with one of our Trustees. We take an individual approach, listening to your situation to make sure we understand what you are looking for. We will review all of the debt settlement options that are available to you and explain the pros and cons relative to your situation. We can help find a solution that makes the most sense, for free, without any obligations.
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To help determine which debt settlement solution is best for you, ask yourself the following questions:
- Are you falling behind with your regular payments?
- Are high interest rates making it harder for you to get out of debt?
- Do you want to consolidate all of your unsecured debts?
- Are you dealing with demand letters or collection agencies for outstanding debts?
- Do you want protection from creditors taking legal action against you?
- Are you able to make a fixed monthly payment?
- Are you considering declaring bankruptcy for a fresh start?
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What You Need to Know About Debt Settlement in Alberta
Debt settlement could be any type of solution to renegotiate payment terms, including changing the amount that you owe, reducing or removing interest, extending the repayment period or removing the debt entirely. Different situations call for different solutions. We seperate these into two categories: informal debt settlement and formal debt settlement.
Formal Debt Settlement
Formal debt settlement options are legally binding procedures that involve a formal process outlined in federal or provincial legislation. These procedures are protected by law and regulated by the government to ensure that all parties are dealt with fairly. They must be prepared and administered by qualified professionals that are licensed for this type of work. In Alberta, your formal debt settlement options include:
Declaring bankruptcy in Alberta is often the last resort to get out of debt and back on track. The process of filing a bankruptcy is set out in the Bankruptcy and Insolvency Act (BIA) with specific steps and obligations. Only a Licensed Insolvency Trustee can prepare and file the bankruptcy documents for you. They will administer the bankruptcy according to the requirements of the BIA. Before filing for bankruptcy the Trustee will review your situation and all other options that may be available.
A consumer proposal is a relatively new debt settlement solution. It is a formal agreement between you and your creditors that allows you to renegotiate your amount owing and the repayment terms. In many cases your unsecured debts can be reduced by up to 80%, with the remaining amount being paid over time (to a maximum term of five-years) without interest. The process for consumer proposals is also set out in the Bankruptcy and Insolvency Act and they are also only administered by Licensed Insolvency Trustees.
Orderly Payment of Debts
This is a unique solution that is made available by the provincial government and is only for Alberta residents. By applying to the courts you can combine all of your unsecured debts together, making periodic payments to the court that will be distributed to your creditors accordingly. Unlike a consumer proposal, you will be paying the full amount of what you owe at a fixed interest rate of 5%.
Informal Debt Settlement
Informal debt settlement options may be attempted personally or through a debt counsellor or financial institution. BE CAREFUL! Some companies that offer to help with debt are misleading consumers. Informal solutions may be appropriate for specific situations, but there are some creditors that will refuse to enter any informal negotiations. Here are some information debt settlement options.
A debt management plan is an informal offer to your creditors, asking them to remove interest or extend your repayment period. A credit counsellor will contact your creditors on your behave with the informal proposal. If all creditors agree, then you may be able to consolidate your debts and make monthly payments without interest until the entire amount has been paid. Credit counsellors will charge an additional administration fee for their work in preparing and administering the DMP.
NOTE: Creditors can choose not to participate in the DMP and a DMP provides no legal protection from collection agencies.
Debt Consolidation Loans
You can research and apply for debt consolidation credit products with your bank or financial institution. This will usually be in the form of a loan or a line of credit. If you qualify, you may be able to borrow enough money to pay off everything that you currently owe. You would then only have to worry about one creditor and one periodic payment. Debt consolidation loans have interest and may require a co-signer or collateral.
NOTE: There is often no conselling or support to help you avoid getting into even more debt.
You can contact your creditors individualy to ask for debt forgiveness or more time to pay what you owe. Some creditors have policies with certain allowances under specific conditions and others may be willing to accept new terms to maintain a relationship of goodwill. Be careful not to enter into a situation that will become even more burdensome and use your discretion when dealing with credit.