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Declaring bankruptcy is a drastic measure, a last resort when there's been a failure to settle your debts in any other manner. Before undertaking bankruptcy procedures, you should meet with a financial adviser who specializes in debt management to determine whether filing for bankruptcy is the best solution for you. In Canada, Deloitte and Touche Inc. is one of the better-known financial advisory companies, and any phrases in quotations in this article are from their booklet "Debt Crisis". If you seek advice early enough (preferably before payments have fallen behind to the point where creditors begin demanding payment through collection agencies) there may be other options - aside from bankruptcy - to deal with debt that appears overwhelming.

A good financial adviser will have you complete an extensive review of all debts, assets, income, and expenses in order to assess your potential for other avenues of debt settlement. Acknowledging financial distress is extremely difficult for many people - hence the success of agencies that advertise on television and sign up clients by telephone. An individual in financial difficulty has only to call a toll-free number to reach an agent who can collect the necessary information right then and there, if you have access to all the necessary financial records. After the initial interview, and before signing any documents, you should check with the Better Business Bureau to ensure that the company is legitimate. This applies just the same to advisers with whom one must make an appointment and meet face-to-face.

The financial review must be all-inclusive; you must not overlook any creditor or any income for any reason. The information gleaned from this assessment will determine which of the following approaches is the best solution for your situation.

Personal Bankruptcy:

If the total debt is less than $75,000 and you have steady employment or someone willing to guarantee the settlement, a formal Consumer Proposal, usually administered by a Trustee in Bankruptcy, can be made to creditors providing for payment of a portion of the total debt over a period of time not to exceed five years. Once the proposal is filed, garnishees and collection agents will be stopped. If a "majority of creditors accept the proposal, it will be legally binding on all parties". (p. 5) If creditors reject the proposal, you may be automatically bankrupt and the trustee will initiate "an equitable and orderly distribution of (your) assets amongst the creditors."

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