What Are The Bankruptcy Alternatives In Canada


Many honest and responsible people find that they cannot meet their monthly payments and other financial commitments and wonder what are the alternatives to bankruptcy in Canada available to them. Despite good intentions, they can no longer make their debt payments.

When this happens, RESPONSIBLE people discover that there are only a limited number of RESPONSIBLE options open to them.



Consolidation Loan

When confronted by “The Problem”, the first thing most people try to do is to consolidate their debts. Viewed by many as the best alternative to bankruptcy, this will usually mean lower monthly payments. It also means it will take longer to pay off.

A debt consolidation loan will help keep their good credit rating and should relieve the monthly payment pressure. However, when their credit rating has already deteriorated, or if they lack collateral, they may not be able to get such a loan. They may need a co-signor or guarantor, which may be impossible for them to find. If you have not investigated the possibility of consolidating your debts, you should.

Informal arrangements with creditors

Informal Arrangements

Informal arrangements” The Problem” can sometimes be solved, at least temporarily, by negotiating with the creditors to reduce the monthly payments.

This can be done by direct negotiations or through the services of a counselling agency or solicitor. Informal Arrangements allow a person to work their way through a temporary financial problem for a relatively low cost. On the other hand:

  • They can be very difficult to negotiate
  • They do not stop a creditor from suing
  • They offer no protection from a Garnishee
  • They don’t usually stop interest accumulation
  • They normally need to be accepted by 100% of the creditors to be effective

There are many less-than-scrupulous people out there who may try to take advantage of your situation. Use a solicitor, accountant, trustee, or well-recognized agency.

A couple considering a consumer proposal


The Bankruptcy & Insolvency Act offers people two alternatives to filing for bankruptcy. The first of these is a Proposal.

A Consumer Proposal Ontario is a repayment plan based on a debtor’s means. It may involve paying 100% of the amounts owed, or only a portion. It may be based upon a lump-sum payment, or on monthly payments.
It must be accepted by the creditors and approved by the court.

A proposal:

  1. Stops all the interest charges
  2. Stops all lawsuits and Garnishees
  3. Does not have to be accepted by everyone – the majority rules
  4. Does not require direct, individual negotiations

There are two types of Proposals; Regular & Consumer.



The second of the legal solutions to “The Problem” is Bankruptcy. Though nobody wants to file for bankruptcy, sometimes it is the only responsible option left. But, coming to grips with the decision may be the hardest part. And the misconceptions don’t help.

Simply put, declaring Bankruptcy is a legal process that breaks the deadlock between creditors (who rightfully want to be paid) and the debtors (who can’t pay). A Trustee in Bankruptcy is appointed to manage things and protect everyone’s rights.

There are a thousand questions and concerns about bankruptcy. “Will I lose all my assets?” or “Will I have to go to court?” are normal concerns. The answers, however, are not standard. They vary from one set of circumstances to another, though most people don’t lose their furniture or personal belongings. The only way to find out is by having a Trustee assess your situation. There is no substitute for this Assessment!

We DO NOT charge for this assessment consultation. To find out what are the bankruptcy alternatives in Canada, please contact our office.

Contact Richard Killen
FREE No Commitment Consultation

Contact us now for a fresh start!

“Serving Toronto & the GTA for over 25 years.”



    cup half full book

    question and answer

    Recent Blog Posts

    About Richard Killen & Associates

    Since 1992, Richard Killen & Associates, a Licensed Insolvency Trustee, have helped thousands of people resolve their financial problems. With 25 years experience in this industry, our president, Richard Killen, and the rest of our team understand the difficulties that honest people can sometimes find themselves in. This expertise makes it possible to provide you with a service that effectively deals with the issues.

    Serving the GTA for 25 years