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When you are considering the filing of a bankruptcy in Edmonton, Alberta it is important you are aware that there are alternatives to bankruptcy. Bankruptcy is designed to be a last resort and that is the approach that the licensed trustee who will be reviewing your file with take. When reviewing your file the trustee will consider 4 critical pieces of information when helping to determine what option is best: Income, Expenses, Assets and Debts, and based on this information they will help you to understand how the following options will impact your situation.

As a matter of course the other options that will be reviewed will include:

A Debt consolidation loan.

If it is not the amount of debt you have that is the problem, but the high interest that is being charged, then a debt consolidation loan is can be an excellent way to avoid a bankruptcy. With debt consolidation the idea is you obtain a consolidation loan from your bank that has a lower interest rate than your other debts. Use that loan to immediately pay off all your higher interest debts (i.e. credit cards, pay day loans etc.) so that your cost of borrowing is significantly reduced.

This will typically result in being able to pay your debts off on a quicker basis with lower payments each month than you are currently making. For this to be a valid option in your circumstance you need to a) be able to afford to pay the debt in full and you need to be able to qualify with your bank or other lending institution.

A word of caution, a large majority of people who enter into a consolidation loan fail to examine their current spending habits and as a result many people end up owing significantly more than they started. If you continue spend the same way you have in the past then the consolidation loan wonít work as in very little time you will end up with both a consolidation loan and balances on the accounts you just consolidated. By filling out the Online Assessment we will be able to help you determine if a debt consolidation loan would be a possibility

Debt Pooling

Debt poolers havenít been around for very long. The idea is that you can have a company who, for a fee, will contact your creditors and agree to distribute any money you pay them to your creditors net of their fees. You have to be careful with these types of companies, the fees can be quite high, there is no legal authority to bind your creditors to anything and there is nothing to stop your creditors from ignoring the debt pooling arrangement and simply enforcing their rights directly against you. The biggest problem is that there have been some Debt Poolers who make promises (i.e. improving your credit rating, freezing interest with all your creditors, being able reduce the principle of your debts) they canít regularly achieve. So I while this is technically one of the options, I suggest you be extra careful when dealing with these types of organizations. Make sure you ask for references and investigate the companies history before you agree to anything.

Informal Proposal / Debt Settlement.

If you only have a small number of creditors and your debts are fairly old, it may be possible for you to negotiate a settlement directly with your creditors. For example, if you owe $10,000 on a credit card, have not made a payment on the debt in the last 12 months, then you may be able to offer your creditors a $3,500 in a lump sum payment to settle this debt. The difficulty with this is you often have to have cash available to do this and you will often need all of your creditors to cooperate with the settlements being proposed for it to work. The other thing you need to be careful to do is to make sure the settlement is put in writing and signed off by your creditors prior to giving them any money.

Orderly Payment of Debt (Debt Management Plan).

This is a program that is done through Money Mentors, a not-for-profit Alberta based credit counseling agency. Their Orderly Payment of Debt (OPD) program is designed for people who canít qualify for a consolidation loan but can still afford to pay their debts in full. What happens is that Money Mentors makes an application to court to freeze your debts where they are currently. This serves to freeze the interest being charged and then you make a monthly payment directly to Money Mentors each month which is distributed among all of your unsecured creditors. Money Mentors charges a standard 5% interest rate, which results in smaller payments and paying off the debts at a much quicker pace. As part of the online assessment we will be able to determine how much OPD would cost and whether it is a realistic option given your situation.

Consumer proposal.

A consumer proposal a court sanctioned way to negotiate a settlement with your creditors. This settlement can take many forms (i.e. a reduction in the monthly payments, an extension of the amount of time required to pay, a reduction of the principle etc.) as long as more money is offered to the creditors than in a bankruptcy and the majority of the creditors agree to cooperate with the terms of the settlement. The consumer proposal is ideal for people who cannot afford to pay their debts in full but still want to avoid bankruptcy. For more information on bankruptcy you are best to speak directly with a local trustee or fill out the online assessment. The trustee will first determine what would happen in a bankruptcy, then they will determine if you have sufficient cash-flow to be able to make a proposal the creditors would consider.


Bankruptcy is a legal process that immediately protects you from your creditors and will clear you from the majority of your unsecured debt. It is designed for people who simply cannot afford to deal with the existing debt and need a fresh start. As the bankruptcy process can be significantly different depending on your situation we recommend you contact a local trustee to arrange for a free consultation or complete the online bankruptcy assessment. This will allow the trustee to review your situation and explain what you can expect if a bankruptcy is filed.