trustee in bankruptcy

Dealing with debt

Posted on by Behdad Hosseini

Dealing with debt

Unmanageable personal debt is an experience most people want to avoid. It can be a living hell. The collectors never stop calling. The situation is kept secret from friends and even family members. It can often feel like the world is caving in with no sign of escape.

Yet there are options. There always are. The debt can’t be taken away with the snap of a finger, and mistakes of the past won’t be erased. However, there exist legal remedies to serious financial debt that constitute light at the end of the tunnel and a pathway towards financial health and personal wellness.

Various options

Let’s briefly examine these options. Because many people want to avoid bankruptcy, including its stigma, debt consolidation is often a consideration. Debt consolidation usually involves getting one loan to pay off many different loans.

So, instead of managing the various payments with different interest rates to a number of creditors, debt consolidation allows for simplicity: one creditor, one interest payment, one worry — instead of many.


The primary drawback of debt consolidation, however, is that such a loan is becoming increasingly difficult to obtain. Once obtained, the interest payments may be even higher. And you can still have a creditor making calls if payments are too difficult to make.

Alternatively, with bankruptcy, the process will get the creditors off your back since it’s the bankruptcy trustee whom the creditors have to deal with. Once the bankruptcy process is over, and a person is discharged, you’re free and clear. There is usually very little difference in the credit rating resulting from bankruptcy versus continuing failure to pay off debt.

However, one significant drawback of bankruptcy is that it’s really best designed for one-time use. Declaring bankruptcy a second time, or more, will mean a lengthier process and greater challenge of discharge. With bankruptcy, you really only want to go to the well once.

Yet another possibility

Finally, there is at least one more alternative to both debt consolidation and bankruptcy. It’s called a consumer proposal: a program the Canadian government has established that legally protects debtors from creditors, but doesn’t involve outright bankruptcy.

A consumer proposal allows a bankruptcy trustee to negotiate terms of repayment with creditors. The end result usually means creditors, who sometimes get nothing from bankruptcy, get more out of a consumer proposal, while the debtor avoids the perils of bankruptcy, too.

If you need a professional advice on family law, or if you’re thinking of divorce, please phone us here at Hosseini Law Firm (HLF) for a 15 minute free consultation: 416-628-4635, or please use the contact form provided on this page. Thank you. 

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