Alternatives to personal bankruptcy

1. Contact your Creditors

   Explain why you cannot make your payments and suggest an arrangement that could work for both of you.
   You may be surprised that many creditors are more than willing to co-operate.

2. Debt Consolidation Loan

   You can approach a bank or financial institution about combining or "consolidating" your debts into one loan. This creditor pays off all your debts and, in return, you make a monthly payment to that creditor. Make sure you shop around - interest rates vary. Avoid further credit purchases; this could make your debt load too great for you to handle.

3. Informal Proposal

   In some cases we can work with you and your creditors to set up a payment plan that will allow you to pay your creditors in an orderly way and thus help preserve your credit rating. This operates similar to a debt consolidation loan except you do not borrow the money to pay off your creditors.

4. Proposals

   Under the Bankruptcy and Insolvency Act, a Trustee or an administrator files a Proposal or an arrangement between you and your creditors to have you pay off only a portion of your debts, extend the time you have to pay off the debt, or provide some combination of both. To be acceptable, your creditors must be better off under a Proposal than if you go bankrupt.
   
   There are two types of Proposals an individual can file:
   
   • "Consumer Proposals" - A person is eligible if his aggregate debts, excluding debts secured by a principal residence, do not exceed $75,000. The consumer Proposals cannot be for more than five years. If the creditors do not accept the Proposal the debtor is not automatically Bankrupt. Counselling is required.
   • "Other Proposals" - There is no restriction on the amount a person owes. If the creditors do not accept the Proposal the person is automatically bankrupt effective back to the date of the filing of the Proposal. Counselling is not required.

5. Orderly Payment of Debts

   Another option available is a program under the Consolidation Order of the Bankruptcy and Insolvency Act, known as "OPD".
   
   This program is not operated by the Trustee community, but by Credit Counselling Services of Alberta. In Edmonton, they are located at:
   
   Suite 440, Sun Life Building
   10123 - 99 Street
   T5J 3H1
   Phone (780) 423-5265
   Toll-Free 1-888-294-0076
   
   If you are accepted by their program, you will be required to pay 100% of your unsecured debts together with interest of 5% from the date of the order. These payments can be over an extended period, not exceeding 4 years. If you also have debts for Student loans, they are able to have you pay all your other creditors over a first period and then allow you a second period to retire the Student loans. To contact them, call Credit Counselling Services of Alberta.