Debt Settlement Toronto
Essential Information

It depends on your priorities and your financial situation. Generally, bankruptcy results in creditors being repaid an average of 17% of the debt owed to them, while many consumer proposals lead to repayment in the range of 40%–60%. However, both bankruptcy and consumer proposals carry a permanent, legal record and will hurt your credit for approximately 6–7 years after the process ends.

If, on the other hand, you complete a debt settlement (Canada-wide) through a non-profit credit counselling agency, the negative effect on your credit is a lot shorter — just two years. This compares to six years when you negotiate yourself or use a for-profit company. So, a debt settlement can be an attractive option if you do it through a non-profit like ours, achieve results similar to a consumer proposal, and your credit bounces back 4 years sooner — and you avoid a court record. However, if minimizing the total amount of debt you repay is your primary concern and you don’t mind long-term credit damage, bankruptcy might be a preferable route (that is if your income isn’t too high and you don’t have assets that your creditors would be interested in selling to repay your debt).

Negotiating your own settlement is possible — which is why some people search for “free debt settlement Toronto” or “personal debt settlement Toronto” — but it can be challenging; very challenging. A practical approach is to offer your creditors more than they’d expect to receive from your next-best alternative. For instance, if bankruptcy would likely yield about 17% of your debt repaid to your creditors, an offer of 30% could look reasonable. If your next best option would be to file a consumer proposal, then offering closer to 50% could be appropriate. We strongly recommend talking to one of our non-profit credit counsellors before making offers — they can assess your situation and estimate the most likely outcomes. They can let you know what your realistic best debt relief options are. If one of those options is a consumer proposal, they could estimate what one might end up settling for based on your specific creditors and your financial situation. If another of your realistic options is bankruptcy, they’ll let you know so you can consider that as well.

In the end, though, here are some of the reasons why we wouldn’t suggest doing a debt settlement on your own and instead do it through our organization:

• 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 debt settlement in Toronto, speaking with one of our experienced credit counsellors is a great place to start. At the very least, you’ll learn a whole lot and have a much better idea of how to move forward.