What’s The Most Affordable Way Out Of Debt?

There are several paths you can take out of debt, but some are more expensive than others. Everyone’s financial situation is unique and different people will be able to qualify for different debt relief options. Bankruptcy trustees can help you determine which one is the best option for you, but it will help if you’ve been introduced to the three main paths out of debt: debt consolidation loans, bankruptcy, and consumer proposals.

Debt Consolidation Loans

A debt consolidation loan is a loan that rolls all your unsecured debts into one. If you can get a low interest loan from a bank, these can be an affordable way out of debt. The problem is that banks avoid risky loans and many of the consumers who could most benefit from these types of loans don’t qualify. The convenience of paying one monthly bill instead of juggling multiple credit card and utility bills isn’t worth it if interest rates are higher. The worst type of debt consolidation loan is one that needs to be secured – where the lender can claim assets like your car or equity in your home if you fail to pay.


Bankruptcy is possibly the most familiar way out of debt. It’s a kind of shorthand in Hollywood and on TV for “financial ruin.” Bankruptcy can be an expensive way to settle your debts. If you have any assets that are not protected by local exemptions (such as personal belongings like clothing and tools of the trade, furniture and appliances, a vehicle worth up to $6,000, and some equity in your house in Ontario), may be settled (i.e., sold) and disbursed to your creditors. A bankruptcy trustee can explain the exemptions and process if you book a consultation with a trustee like David Sklar& Associates in Toronto.

If you have surplus income, you may also be obligated to pay that to your creditors. Bankruptcy trustees David Sklar& Associates typically recommend searching for alternative debt solutions before moving directly into bankruptcy. Bankruptcy trustees will help you determine whether or not you are insolvent and the debt relief option that best fits your situation.

Consumer Proposals in Ontario

Everyone’s path out of debt is different. It depends on your financial situation, your income, your assets, and the debts that you owe. But consumer proposals may be one of the most affordable debt solutions from David Sklar & Associates available.

In a consumer proposal, a bankruptcy trustee proposes a reduction in your debt to your creditors and a monthly payment that you can afford. Creditors must stop charging you interest, debt collectors must stop contacting you, and creditors cannot take legal actions against you to collect their debt. If they agree to the proposal, you can repay a fraction of your debt over a period of up to five years.

If you’ve contacted a bankruptcy trustee early enough and you qualify, creditors often accept a fair consumer proposal. Consumer proposals were invented as a way to protect the assets of people who had become insolvent but still earned an income.

If you’re insolvent, don’t wait until it’s too late. Ask about a consumer proposal with a bankruptcy trustee when debt feels like it’s getting ahead of you.