Answer:  No.

If you have more debt than you can handle, bankruptcy may be an option, but it is the last option you should consider.  There are many bankruptcy alternatives, and you should consider all of them before deciding to file bankruptcy.

Start by making a personal budget to see if you can cut expenses and use the extra cash to repay your debts.   On this site we offer a free trial of budgeting software to make the job very easy.

Your next option is to consider a debt consolidation loan, where you borrow at a lower interest rate to repay your high interest rate debts (like credit cards and payday loans).

If you don’t qualify for a debt consolidation loan, a credit counsellor may be able to help you file a debt management plan where you get extended time, and lower interest, to repay your debts.

If that’s too expensive, a consumer proposal is a way for many Canadians to make a legal settlement on their debts for less than the full amount owing.  (In the United States, you can consider a Chapter 13 Wage Earner Plan).

Only after you have tried all of these options should you consider personal bankruptcy.

Answer: Practically, there is very little a Canadian creditor can do to you in the U.S.  Typically they will phone you and send letters.  If you don’t pay, they could seize your Canadian bank account (which isn’t a problem if all of your money is in your bank account in the United States).  Their final option is to sue you, which is possible but difficult, since it’s a lot of extra effort to sue someone in a different country.  It’s possible that the courts in the U.S. won’t allow them to collect the Canadian debt in any event.  Therefore, it is unlikely that they will do anything.

If they do, you could consult a U.S. Bankruptcy Attorney for more information.

My problem is with the bigger debt sometimes I get behind sometimes in a paycheck there is not enough money to go around to everyone. I am trying to make it easier on myself before I start back school, but it feels like I am getting no where.

I have no idea how to budget and it feels like there is no help out there.

Answer: I have two suggestions.  First, it is important to make a budget so that you can decide where to spend your money.  (You can even listen to our budgeting radio show for more tips on budgeting).

In your case budgeting may only be part of the problem.  Even if you know where all of your money goes, you may still have more debt than you can handle, and you may need a more formal solution, such as debt consolidation loan, a consumer proposal if you live in Canada, a Chapter 13 Bankruptcy if you live in the United States, or perhaps even personal bankruptcy. For more information, contact a bankruptcy trustee or a credit counsellor to review your situation and help you work through all of the possible solutions to your debt problems.

If you have made a household budget to understand where your money goes each month, and if you don’t qualify for a debt consolidation loan, and if you have explored credit counselling and a debt management planand if you have looked into a consumer proposal for Canadians, or for Americans a Chapter 13 Bankruptcy , and none of those options will work, personal bankruptcy may be the correct option for you.

The key is to evaluate all other options, and then meet with a licensed bankruptcy trustee to review your options in deal. A free initial consultation will help you make an informed decision about whether or not bankruptcy is the correct option for you.

First, you must be a resident of Canada, or have Canadian debts. If you are an American, the nearest alternative is a Chapter 13 Wage Earner Plan.

Second, you must have the ability to make payments to your creditors as part of your consumer proposal, either as a lump sum, or more typically as monthly payments for a period of up to five years.

Third, you must have a licensed trustee to act as the administrator of your proposal. When you contact a proposal trustee, arrange for a no charge consultation, and ask them to explain how much a consumer proposal will cost, and what the chances are of acceptance by your creditors, so you can determine if that is the correct option for you.

Your credit counselor contacts each of your creditors, and works out a plan where you repay your debts, in full, over a three to five year period. Often they can negotiate a plan where your repayments are made with little or no interest, so you can repay your debts faster than if you repaid them on your own.

How do you know if credit counselling is the correct solution for you? Start by looking at your household budget to see what you can afford to pay each month. Then add up all of your credit cards, bank loans, and other debts, and divide that number by 48 (with 48 being the typical number of months in a debt management plan, although they can last for up to 60 months). If your total debts are $48,000, you would be paying approximately $1,000 per month in a debt management plan.

If you can afford that, credit counseling may be the correct option for you. If not, you may need to consider a consumer proposal for Canadians, or for Americans a Chapter 13 Bankruptcy .

Budgeting is perhaps the most boring word in the English language, but to get started solving your money problems, you need a plan, and a plan starts with a budget.

A budget is simply a list of what comes in every month, and what goes out. You can read more about it, and even download a budget template, at our page about household budgeting. To make a budget, write down everything you spend for the next two weeks (a month is even better), and then add it up to see where you spend your money. Then, see if there are any areas where you can cut your expenses, or increase your income, to free up enough cash to repay your debts.

By making a budget you may be able to deal with your money problems on your own. If not, it’s time to consider other options, such as credit counselling, a consumer proposal for Canadians, or for Americans a Chapter 13 Bankruptcy .

Our site is based in Canada, and contains extensive listings of local credit counsellors, bankruptcy trustees and mortgage brokers.

While www.moneyproblems.ca has helped a lot of people, we have also realized that many people want to ask an anonymous question before contacting an advisor, or simply want to read constantly updated information. That’s why we have introduced the Money Problems Blog, where you can read articles written by our team of experts, and even ask questions.

We have organized the Blog into categories, so simply click on a category to find articles and questions and answers about Budgeting, Debt Consolidation, Bankruptcy Alternatives (including credit counseling, consumer proposals for Canadians and Chapter 13 bankruptcy for Americans), Credit Repair, and Personal Bankruptcy.

Thanks for reading, and we look forward to providing information and answering your questions about how to solve your money problems.