How long does a bankruptcy last?

The length of the bankruptcy depends on a few factors – whether you have ‘surplus income’ (see below) and whether you have been bankrupt before. If you have no surplus income and have never been bankrupt before, you will be eligible for an automatic discharge after nine months.

How long does the Consumer Proposal last?

A Consumer Proposal must be completed within 5 years. Usually the payments are monthly (over 60 months), but a Consumer Proposal can also include a lump sum payment, or a combination of the two. If your finances allow, you can pay it off sooner than the agreed-upon payment schedule lays out.

What is a bankruptcy?

A bankruptcy is a legal process to discharge your debts. It is a declaration that your debts are too high for you to repay – and far better than the old concept of a ‘debtor’s prison’! It allows for a fresh start, while giving your creditors some return on what’s owed only if you have a level of income that allows for payments to be made to them, or unprotected assets that can be liquidated (however, most common assets are protected during this process – see below for more information on protected personal assets).

What is a Consumer Proposal?

A Consumer Proposal is an offer to your creditors to pay back a percentage of what you owe them, based on your ability to pay. It is governed by the Bankruptcy and Insolvency Act, administered by a Licensed Insolvency Trustee. Unlike other negotiated debt settlement plans, it is legally binding on all creditors and usually involves paying back less than the total amount of your debt.

What is a Licensed Insolvency Trustee (LIT)?

Licensed Insolvency Trustees (LITs) are federally regulated professionals who provide advice and services to individuals and businesses to reorganize and resolve financial difficulties with expertise and compassion. LITs help individuals or businesses make informed choices to deal with their financial difficulties. They are the only professionals able to administer bankruptcies or proposals.

Going through a hard financial challenge can get overwhelming, especially when it comes to large amounts of debt. We believe you can get through any financial challenge with the right planning and support.

With over four decades of experience, we are dedicated to supporting individuals and small businesses in making well-informed financial decisions.

This article is about debt repayment and also includes our simple debt repayment calculator. The goal of this article is for general information only. If you are looking for help feel free to book a free consultation. We can help you through a consumer proposal or bankruptcy and will walk you through your best option.

A consumer proposal is when a Licensed Insolvency Trustee like Campbell Saunders creates a formal debt relief option and negotiates with creditors on your behalf to decrease total debt and set up monthly payments for a set amount of time.

Debt Repayment Calculators

A debt repayment calculator is a helpful financial tool designed to help you understand, manage and pay off your debts.

To get started, simply add the full amount of your debt, the estimated interest rate, and choose whether you want to calculate how many months it will take to pay off your debt or how much you should pay to pay off your debt within a set time frame.

Debt Repayment Strategies

There are three common methods used when repaying consumer debt. The debt avalanche method, debt snowball method and debt consolidation.

Let’s discuss each strategy and why someone would use that method.

Debt Avalanche Method

The debt avalanche method focuses on paying off debts with the highest interest rates first while maintaining minimum payments on other debts.

This approach saves you more on interest over time, reducing the overall cost of your debt. Although progress might seem slow initially, this method is highly effective for minimizing total interest paid.

Debt Snowball Method

The debt snowball method emphasizes paying off debts with the smallest balances first, regardless of interest rates.

This strategy provides a psychological boost and motivation from quick wins as you eliminate smaller debts. While it may cost more in interest, the sense of accomplishment can help you stay committed to your debt repayment plan.

Debt Consolidation

Debt consolidation is an approach that involves combining multiple debts into a single, manageable payment. This method can simplify your financial life by reducing the number of payments you need to make each month and often lowering the interest rate on your debt.

By consolidating your debts, you can make it easier to stay organized and focused on paying off your debt.

At CSVan, we offer personalized debt consolidation options to help you regain control of your finances. Our experienced team will work with you to create a tailored consolidation plan that suits your unique financial situation, providing a clear path to financial freedom.

Behavioural Insights and Practical Tips

Understanding the psychological aspects of debt repayment is crucial.

The satisfaction of clearing small debts quickly with the snowball method can keep you motivated, while the avalanche method’s long-term savings can offer peace of mind.

Alternatively, debt consolidation provides a practical approach by combining multiple debts into a single, more manageable payment, often with a lower interest rate.

The best strategy is the one that makes you feel comfortable with your financial situation and in control.

Here are some practical tips to enhance your debt repayment journey:

Setting Realistic Goals

Set achievable debt repayment goals that align with your financial situation. Break down your goals into smaller, manageable milestones to maintain motivation and track progress.

Maintaining Financial Discipline

Consistency is key to successful debt repayment. Avoid taking on new debt and stay committed to your repayment plan. Create a budget to manage your income and expenses effectively.

Budgeting Tools

Utilize budgeting tools and apps to track your finances. These tools can help you monitor your spending, identify areas for cost-cutting, and ensure you stay on track with your repayment plan.

Emergency Fund Importance

Maintain an emergency fund to cover unexpected expenses. This fund can prevent you from incurring new debt during emergencies and provide financial stability.

We suggest working out your monthly budget looking for ways to budget in savings. Then open a unique account just for your savings. This account shouldnt be connected to your debit or easy to access. A separate institution is preferable making it difficult to pull out funds.

Then set up auto deposits to your savings making it automatic.

Automating Payments

Automate your debt payments to ensure timely and consistent payments. Automation reduces the risk of missed payments and helps you stay disciplined. You can also use a reminder app to note which payments will be coming out the next day, and be sure sufficient funds are in your account.

Seeking Professional Help

If you’re struggling with debt repayment, consider seeking advice. Professionals like Campbell Saunders Ltd. can provide personalized guidance and support and recommend the best debt relief options.

Debt Repayment in British Columbia and Canada

Taking control of your debt is a significant step towards achieving financial freedom and stability.

By understanding your debts, exploring relief options, and implementing effective repayment strategies, you can overcome financial challenges and work towards a debt-free future.

We encourage you to use our debt repayment calculator and explore the debt relief options available to you. For personalized advice and support, contact CSVan today. Our experienced team is here to guide you through your financial journey and help you achieve lasting financial health.