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Printer friendlyEight options for dealing with your unsecured debts
Depending upon your financial situation, you may have eight options in connection with dealing with an unsecured debt that you legitimately owe.
These can be summarized as follows:
- Pay the balance using a single payment
- Pay the entire balance using instalment payments
- Settle a debt by negotiating a payment for an amount significantly less than the full amount owing
- Settle multiple debts using an aggressive debt settlement strategy under which you do not pay certain debts over a period of time, and then approach your creditors and negotiate favourable settlements one after another
- Not pay certain consumer debts using a wait-it-out strategy, in the hope that the limitation period will expire on your consumer debt without being sued on the debt. Your failure to pay a debt will likely have negative consequences for you in the future.
- Seek assistance from a credit counselling agency, and pay the entire balance on one or more selected unsecured debts over a period not to exceed five years under a debt management plan
- Arrange for a consumer proposal with a bankruptcy trustee
- File for personal bankruptcy with a bankruptcy trustee
Your eight options for dealing with unsecured debt is dealt with in detail in an e-book written by Mark Silverthorn titled A How-to Guide for Dealing with Collection Agencies in Canada . This review includes a description of each option and its advantages and disadvantages. Seven of these eight options can be described as debt elimination strategies. Except for personal bankruptcy, under a debt elimination strategy a consumer resolves a debt by making payment in full, instalment payments, pays a portion of a debt under a consumer proposal, or negotiates settlements under which a consumer makes a lump sum payment for less than the full amount owing. Depending upon the circumstances it may be possible to obtain settlements for anywhere between five per cent and 85% of the amount a collection agency claims is owing. One of the eight options for dealing with a consumer's unsecured debt is described in this book as a legitimate debt avoidance strategy. Using this strategy an individual declines to pay a consumer debt in the hope that the relevant limitation period will expire without being sued on the debt. It is important to appreciate that failure to pay a debt will likely have negative consequences for an individual in the future. In A How-to Guide for Dealing with Collection Agencies in Canada the book compares how much money, expressed as a percentage of the balance owing, a consumer might pay to deal with a debt using each of these eight options.
You can speak to Mark Silverthorn on the phone and obtain advice on choosing the best options for dealing with your unsecured debts. You can call our office toll free at 1 (866) 996-9941.