Overwhelmed by Debt? Legal Solutions to Avoid Bankruptcy in Quebec
Feeling overwhelmed by debt is more common than one might think. In Quebec, thousands of people experience a difficult financial situation every year without necessarily having to file for bankruptcy.
The good news: the Bankruptcy and Insolvency Act provides several legal mechanisms to regain control before reaching that ultimate solution. This article clearly explains what to do when you are in debt, and above all, how to find a secure way out.
Why Do So Many Quebecers Find Themselves in Financial Difficulty?
Even with good financial management, no one is immune. The most frequent causes include:
The rising cost of living: Housing, food, and gas are expenses that climb faster than incomes.
High credit card usage: When you borrow to pay for essentials, debts quickly become difficult to repay. Read also: Credit Cards and Debt: How to Avoid the Financial Spiral
Job loss or reduced work hours: A few hundred dollars less per month can be hard on a budget.
Separation or divorce: This can lead to a significant increase in expenses.
Health problems: These can reduce your ability to work or generate unforeseen costs.
These situations are common, but the consequences are reversible when you act in time.
Signs That It Is Time to Act
Recognizing the warning signals allows you to prevent debts from becoming crushing:
You use credit to pay for essentials: If you pay for groceries or bills with a credit card, it is often the first red flag.
Monthly payments no longer reduce your balance: You pay every month, but your debt remains practically the same or increases. This is a classic symptom of problematic debt.
Monthly payments are late: Frequent delays, collection notices, service cut-offs… It is then time to consider structured solutions.
Financial stress is constant: Difficulty sleeping, daily worry, tense discussions at home… Stress is a true indicator of financial overload.
As soon as one of these situations arises, seeking advice is a responsible step that will surely help you.
Legal Solutions to Avoid Bankruptcy
Before considering personal bankruptcy, several solutions allow you to reduce or reorganize your debts. The most effective ones are those supervised by a Licensed Insolvency Trustee, as they are recognized by law:
1. The Consumer Proposal: The Most Common Alternative
The consumer proposal is the preferred solution for thousands of Quebecers because it allows you to:
Reduce up to 70% of the total amount of debt.
Freeze interest immediately.
Make a single monthly payment adapted to your budget.
Keep all your assets, including your home and your car.
The proposal is for people who want to avoid bankruptcy but can no longer repay their debts in full. → To learn more, see our article: What is a consumer proposal?
2. Debt Consolidation
Consolidation involves grouping several debts into a single bank loan. It can be a good solution if:
Your credit score is still good.
You are able to obtain a new loan at a reasonable rate.
You wish to simplify your payments.
Warning: Consolidation does not erase debt and is not a legal solution governed by the Bankruptcy and Insolvency Act. If your debt is already difficult to control, this is probably not the right solution for you.
3. The Repayment Plan
It is sometimes possible to negotiate an agreement directly with your creditors. This plan can reduce monthly amounts by extending the repayment period. However:
Creditors are not obliged to accept.
Interest may continue to accumulate.
No legal protection prevents collection procedures.
This is a possible solution, but it lacks the guarantees
of a consumer proposal.
When to Consult a Licensed Insolvency Trustee?
A bankruptcy trustee, now called a Licensed Insolvency Trustee, is the only professional legally authorized to offer the consumer proposal. You should consult one when:
Your debts continue to increase despite your efforts.
You have difficulty making your monthly payments (or are no longer able to make them).
You no longer see how you could repay your debts within a reasonable timeframe.
Creditors or collection agencies have contacted you.
You are ready to get a clear, realistic, and legally framed plan.
The consultation at Gobeil Syndic is free, confidential, and judgment-free. The goal is not to push you toward bankruptcy, but to give you the facts about your options to avoid it.
Regain Control Today
Being over-indebted is not an inescapable situation. Whether it is a consumer proposal, consolidation, or a repayment plan, several solutions exist to offer you a fresh start, in full legality.
At Gobeil Syndic, our team supports you every step of the way to find the best solution for your debt based on your situation, without pressure, and with empathy and professionalism.
Book an appointment for a free consultation by phone, video call, or in person. One of our advisors will evaluate your financial situation, explain your options, and advise you effectively. All of this with no commitment on your part!
We serve all cities in Quebec. Have questions? Call us: (514) 839-0132
