Debt Settlement BC
Essential Information

That depends on your financial goals and circumstance. On average, people who file for bankruptcy repay around 17% of their debts. Those who use a consumer proposal often end up repaying roughly 40%–60%. With debt settlement, Canada has rules that require that both bankruptcy and consumer proposals result in a permanent legal record and poor credit for about 6–7 years after completion.

When a debt settlement is negotiated through a non-profit credit counselling agency, the negative effect on your credit lasts only for two years — rather than the 6 years associated with for-profit settlements or self-negotiated agreements. If a non-profit settlement produces results comparable to a consumer proposal and shortens the time your credit is affected, it can be a worthwhile choice because you’ll avoid a permanent legal record and your credit will recover at least 4 years faster. If your only objective is to minimize the amount of debt you repay regardless of the long-term credit impact, and you don’t mind going bankrupt, then bankruptcy could be the better option (as long as your income isn’t too high and you don’t happen to have assets that are worth a lot).

You can attempt to negotiate directly with creditors, which is why some people search for “personal debt settlement BC” or “free debt settlement BC.” However, negotiating on your own is not something we generally recommend. If you are dead-set, though, on negotiating yourself, the way to approach it is to offer your creditors more than they would expect from your next-best alternative. For example, if bankruptcy would likely yield about 17% of your debt repaid to creditors, offering 30% might be attractive. If you wouldn’t consider something as drastic as bankruptcy and a consumer proposal is your alternative, an offering near 50% could make more sense. Before taking any steps, we strongly recommend speaking with one of our non-profit credit counsellors to assess your options. They can help you in assessing your situation and help you figure out what your realistic best debt relief options happen to be. If a consumer proposal is one of these options, they can estimate how much one might end up settling for based off of your situation and your specific creditors. If bankruptcy is a realistic option for you, they’ll also let you know that too.

In the end, though, there are some key reasons we wouldn’t recommend doing a settlement on your own and why it’s probably better to work with a non-profit like us:

• Some creditors won’t negotiate with individuals or are very tough to work with. We have relationships with over 20,000 creditors across Canada. We have good relationships with major creditors and know how they are most likely to respond to different scenarios. We can come up with the optimal way to approach each of your creditors based on your unique financial situation.
• We’ll be upfront, honest, and transparent with you. If settlement isn’t your best path, we’ll tell you. If through the negotiation process we see that another option is better, we’ll let you now.
• We don’t do this to collect fees. We do this to help people.
• You only pay us if we successfully negotiate a settlement and you receive written confirmation. If you don’t like the settlement amounts we negotiate, you can walk away with no obligation and pursue another debt relief option.
• If you negotiate on your own or work with a for-profit company, your credit will typically be affected for about six years after the settlement takes place. If you work with a non-profit credit counselling organization like ours, the negative credit impact lasts only two years.

If you’re looking for the best approach to debt settlement in BC, speaking with one of our experienced credit counsellors is an excellent first step. At minimum you’ll gain clarity and a better idea of how to move forward.