What Canadians Should Learn About Debt Forgiveness Options

Anyone who has debts and has seen ads for debt forgiveness programs will certainly wonder if there really is anything that can be done. 

Here’s the good news: there are two debt forgiveness options for Canadians. One forgives the debt completely, while the other one just covers a portion of the debt. Both can help significantly reduce how much one owes down to zero. 

Read on to learn about these two options for legal debt forgiveness in Canada:

Two Legal Debt Forgiveness Solutions for Canadians

The very first thing one needs to be aware of is that there are only two options that can discharge a Canadian from debts: Consumer Proposal or Bankruptcy.

Next, a person in debt should realize that there is no such thing as a debt repayment plan that is government-affiliated, subsidized, or supported. If any organization claims to be a part of a certain government program, it’s a clear misrepresentation or fallacy. 

The only government-regulated options that can help release a Canadian from debt are those that Licensed Insolvency Trustees exclusively administer: Consumer Proposals, Division I Proposals, and Bankruptcy. In such cases, only a licensed insolvency trustee is allowed to give legal protection from creditors and prevent creditors from pursuing a person in debt.

It’s best to ask someone claiming to be an expert on this if they are a Licensed Insolvency Trustee before proceeding with any action. It is illegal for any professional or company to claim the ability to manage a consumer proposal or bankruptcy without a Licensed Insolvency Trustee proof.

Debt Settlement Companies

Debt settlement companies can negotiate with creditors for a fee. They offer creditors a lump sum to settle one’s debt, an amount that’s less than what is owed. 

There are credit counselors who might offer the same type of service, though it’s rare to get a promise of getting any debt forgiven. With credit counseling, debt management plans will usually get a borrower to pay back 100% of what is owed (sometimes with no interest), but there might be no debt reduction agreement from the creditor.

One needs to be cautious when it comes to debt settlement because there’s a risk of escalating creditor collection and high fees. That said, there are provincial rules in place that can help curb upfront fee charges and require a license from Consumer Protection, BC, in agents. Though this is considered a form of informal debt repayment and is not a regulated industry at all. Don’t be swayed by claims to have the ability to boost credit scores instantly. Understand that improving one’s credit score requires effort and time. 

How Can One Qualify for Debt Relief and Forgiveness?

The options for debt forgiveness that are available are not “exclusive,” and one does not need any referral to access these debt relief options. One can connect with a Licensed Insolvency Trustee any day to discuss the situation or come up with a debt-relief plan. 

That said, one needs to owe at least $1000 and be in a situation where repayment of debt is improbable. When one meets with the Licensed Insolvency Trustee, the overall situation of the one in debt will be considered to come up with the solution that makes the most sense. For instance, if one can afford to make at least some repayment, a Consumer Proposal with partial debt forgiveness may be a better option than declaring bankruptcy.

Conclusion

Debt forgiveness is a viable option for Canadians who are struggling to pay debts. It can provide a fresh start for those who are unable to make payments and can provide them with debt relief and the opportunity to begin rebuilding their financial stability. 

DebtHelpers.ca can help Canadians needing assistance in managing debt. Set an appointment with Debt Helpers today and take that first step toward financial freedom!