How to Get Out of Debt in Montreal? A Practical Guide

Accumulating debt can happen faster than one might think. Costly unforeseen events, job loss, illness, or a separation… all of these can cause the balance on your credit card or line of credit to keep climbing.

If you recognize yourself in this situation, know that there are realistic ways to regain control of your debts without filing for bankruptcy (such as a consumer proposal or debt consolidation).

Furthermore, in Montreal, several resources are available to help you gain clarity and get through this ordeal. This guide can help you perform an initial sort of your finances, understand your options, and identify services that can make a real difference.

Assessing Your Debt

Before choosing the solution that will best help you manage your indebtedness, take the time to accurately determine the precise state of your personal finances.

Start by listing all your debts. Regardless of the format (paper, Word, or Excel), the important thing is that it is clear and complete. In one column, indicate:

• Your credit cards

• Your line of credit

• Your tax debts

• Your student loan

• Your auto loan

• Etc.

Also note in the other columns:

• The name of each creditor (bank, credit union, etc.);

• The total amount due;

• The interest rate;

• The minimum monthly amount;

• And all late payments.

Take the time to look for the correct figures on your statements or online (it is better to be precise).

Next, create a second table: your monthly budget. This time, record your net income (what you earn after deductions) and your essential expenses, such as:

• Rent or mortgage amount;

• Groceries;

• Bills (Hydro, Internet, cell phone);

• Transportation (gas or metro/bus pass);

• Insurance;

• Medication;

• Etc.

Once these two tables are completed, you will have an overview: do you have enough money to make your minimum payments? Is there a bit of money left to reduce your principal? Or are you overdrawn every month? These calculations allow you to see if your situation can be corrected simply by adjusting your budget or if external intervention is desirable.

Who to Ask for Help with Your Debts in Montreal?

Several Montreal organizations offer neutral, humane, and free—or very low-cost—support to help you better understand your options and make the right choices.

The ACEFs (Associations coopératives d’économie familiale) are present in several Montreal neighborhoods (ACEF de l’Est, du Nord, du Sud-Ouest, etc.). These community organizations offer tools and personalized help to manage your affairs:

• Free consultations to create your budget;

• Personal finance workshops;

• Support for negotiating with your creditors.

Option consommateurs also offers debt consultation services:

• Individual budget consultations with specialized advisors;

• Support to better manage your finances;

• Explanations regarding possible recourse against abusive creditors;

• Information on legal steps related to insolvency.

  The whole process takes place in a neutral setting, without pressure, with the objective of guiding you toward the solution that suits you best.

The Proximity Justice Centre of Greater Montreal offers free and confidential legal information. Here is what the advisors offer:

• Explain your rights and obligations toward creditors;

• Help you understand legal documents (collection notice, seizure, judgment, etc.);

• Give you an overview of procedures governed by the Bankruptcy and Insolvency Act, without representing you or advising you (no personalized legal advice);

• Refer you to Licensed Insolvency Trustees like Gobeil Groupe Conseil, if that is the best option for you.

Banking Solutions: Debt Consolidation

If your situation is not too critical, one of the first potential solutions may be debt consolidation. This is a solution proposed by banks or credit unions. Concretely, consolidation consists of:

1. Taking out a single loan to repay all your high-interest debts;

2. Obtaining an interest rate lower than that of credit cards;

3. Reducing your monthly payments to a single fixed amount.

But beware: to be eligible, you must have a good credit record and the capacity to repay.

The Consumer Proposal: How Does It Work in Montreal?

When debt consolidation is not possible, there is a compelling alternative to bankruptcy: the consumer proposal. It is a debt solution governed by the federal Bankruptcy and Insolvency Act, which allows you to negotiate a repayment agreement with your creditors while keeping your assets.

Here is how the proposal works in Montreal:

• You make an appointment with a Licensed Insolvency Trustee. They are the only professionals legally authorized to administer a proposal.

• The trustee analyzes your situation and proposes a reasonable repayment plan (often an amount between 30% and 70% of your debts).

• You make a formal offer to your creditors, and they have 45 days to accept or refuse.

• Once the proposal is accepted, you make fixed, interest-free monthly payments, often over a period of 3 to 5 years.

• At the end, you are released from your debts.

The consumer proposal also allows you to avoid bankruptcy in Montreal and put an end to collection calls. Free consultations are available to evaluate if this option is right for you, with no obligation.

Real-Life Case: Marie, 42, Montreal-North

Even though she works full-time at a call center, Marie accumulated nearly $35,000 in debt across several credit cards after a difficult separation and a sick leave. Despite her efforts to pay the minimum monthly amounts, the principal remained the same. Since her credit was already affected, consolidation was not an option.

She then met with a trustee, who proposed a realistic solution: a consumer proposal of $18,000 over 5 years, with monthly payments of $300. Today, two years later, Marie is finally breathing again. She manages her budget better, attends financial education workshops, and is no longer over-indebted.

Which Solution Is Right for You?

There is no single solution for getting out of debt in Montreal. Every situation is different, but here are a few pointers to guide you:

The important thing is not to remain isolated. At the first signs of difficulty, ask for help. The earlier you act, the more options you will have.

For More Information on the Consumer Proposal in Montreal

If you wish to obtain more information on the consumer proposal in Montreal, book your evaluation meeting now.

This option represents a legal and structured solution to avoid bankruptcy and start over on a better foundation. An advisor from Gobeil Groupe Conseil, Licensed Insolvency Trustee, will help you gain clarity and get out of debt.