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What is Canadian Bankruptcy? Are you over your head in debt? Thinking about using a debt settlement company service?
Debt settlement is relatively new in Canada. It is a bankruptcy alternative for people who have over serious credit problems.

DEBT SETTLEMENT DESCRIBED Debt settlement is when you or a company that represents you approaches your creditors and tries to negotiate a percentage off your current principal and interest owing.

Example - You owe the following amounts:
Credit Card #1: $ 2,500
Credit Card #2: $ 5,000
Credit Card #3: $12,500
Car #1 loan: $22,900
Line of credit: $14,000
Total Owing: $56,900

THE PROBLEM STARTS - you just got sick and can't work and your spouse got moved to part time hours.

All of a sudden the debt that was well within your means is now out of reach payment wise. This type of scenario causes a great deal of stress on the husband and wife and their children. It's enough stress to cause havoc with your health. This type of scenario is becoming more common place in Canada.

In this example, you would approach your creditors and tell them that you're not able to pay your bills, and would like to settle your debts at 50+ on the dollar. If you successfully settle your debt at 50% off the outstanding amount, your debt would be reduced from $56,900 to $28,450. This would reduce your payments and interest by half.

Is this the end of the story? Do creditors mind if you only pay them half of what you agreed to? The answer is NO! Creditors object to people only paying part of what they agreed to by sending very bad reports to Equifax and TransUnion. They'll rate your credit items as R9 -Bad debt /written off which will then harshly affect your credit score and hamper you from getting credit in the future. This is not something you would want do without serious consideration.

Debt settlement is only a Canadian bankruptcy alternative. Bankruptcy becomes public record and you have to admit to declaring bankruptcy for the rest of your life. The idea of having to admit to declaring bankruptcy in Canada will usually make people want to do debt settlement instead.

In summary, debt settlement is a service for some people, but you should seriously consider this alternative as it does have harsh credit "side effects".

Monty Loree is the founder of which helps Canadians better understand their money, credit and the financial industry in Canada. In our financial podcasts, we are interviewing industry experts who give our visitors the truth about the financial industry. Canadian Money Advisor is an important source for Canadians to learn more about their money. Canadian Debt Settlement discussion. SEE: Debt Settlement Canada post. and Canadian Bankruptcy and

Article Source: http://EzineArticles.com/?expert=Monty_Loree

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