Helping Canadians with Debt Relief


Options for Dealing with Unsecured Debt

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:

  1. Pay the balance using a single payment
  2. Pay the entire balance using instalment payments
  3. Settle a debt by negotiating a payment for an amount significantly less than the full amount owing
  4. 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
  5. 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.
  6. 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
  7. Arrange for a consumer proposal with a bankruptcy trustee
  8. File for personal bankruptcy with a bankruptcy trustee

Except for personal bankruptcy, under a debt elimination strategy, a consumer resolves a debt by making payment in full installment 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. Using 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.

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