How to Avoid Personal Bankruptcy?

Dealing with debt is difficult, but there are ways to avoid bankruptcy. Before considering this radical option, it's important to be aware of the alternatives available in Quebec and to understand the circumstances in which they may apply.

5 strategies to avoid personal bankruptcy

A number of solutions exist to reduce your debts and avoid personal bankruptcy, protect your assets and get back on a sustainable financial footing. Here are the main options to consider.

1. Making a financial diagnosis

The first step in avoiding bankruptcy is to make a clear diagnosis of your situation. This means taking stock of your debts, income, expenses and assets, ideally with the help of a licensed insolvency trustee or financial advisor. Several firms in Quebec, including Mallette, offer free and confidential consultations to help you find the best solution.

2. The consumer proposal

The consumer proposal is often the most advantageous alternative to bankruptcy. Framed by law and administered by a trustee, it allows you to reduce your monthly payments, eliminate interest and, above all, keep your assets (house, car, RRSP). This solution is ideal for people with a stable income, but whose debts have become too heavy.

3. Debt consolidation

The debt consolidation involves combining several debts into a single loan, with a lower interest rate than credit cards. This simplifies your payments and can reduce your monthly costs. However, if your credit rating is already very poor, it may be more difficult to obtain such a loan from a financial institution.

4. Voluntary agreement with creditors

Some debtors choose to negotiate directly with their creditors to establish a payment schedule or reduce their payments. Although this is a flexible option, it does carry risks. In the absence of a legal framework, your creditors can reverse their decision or take legal action if you fail to honour your commitments.

5. Budget advice and financial recovery

Finally, for people in temporary or moderate difficulty, budget support may be all they need. Reviewing your spending habits, drawing up a structured repayment plan and reorganising your priorities can prevent you from sinking into an irreversible situation. Tools such as budget coaching or financial recovery programmes are particularly effective in prevention.

When should you consult a trustee to avoid bankruptcy?

There are several warning signs that indicate it's time to seek help. If you are receiving incessant calls from creditors, accumulating late payments or using one credit card to pay another, your financial situation has probably become difficult to manage. These behaviours are often the first indicators of uncontrolled debt.

Consulting a Licensed Insolvency Trustees as soon as possible allows you to explore all the alternatives to bankruptcy before it's too late. The sooner you act, the more solutions you'll have available, whether it's debt consolidation, a consumer proposal or a tailored budget plan.

Avoid bankruptcy and act now

Avoiding bankruptcy in Quebec is possible thanks to solutions tailored to each situation. Whether it's a consumer proposal, debt consolidation or a budget plan, there are many ways to reduce your debts while protecting your assets and your peace of mind.

At Mallette, our licensed insolvency trustees work with you using a human, local and professional approach. A simple, free and confidential consultation is all it takes to explore your options and get off to a real financial start. Don't wait for the situation to get worse: our experts are here to help you today!