Debt forgiveness can simply be termed as writing off an outstanding debt by a debtor whether partially or in full. This is a lengthy process and only happens when the creditors have tried every possible option to recover their cash to no avail. If you are a Canadian citizen, you can go for debt forgiveness Canada and this will save you hassles of having to stick with some debts that you can’t even afford to handle.
Why do creditors prefer debt forgiveness?
Debt forgiveness will eventually save the creditors the time and resources that would have been spent in trying to recover the unpaid amounts from the debtors. These resources can now be used in other productive endeavors that will end up making up more cash for the creditors. By following some proper laws and regulations, the creditors can also claim tax deductions owing to a forgiven debt. This will therefore lower the total losses to the creditor.
Instead of waiting until your debts get out of hand, you can go for debt forgiveness as failure to do so will just increase the amount you owe due to penalties among other expenses. This will also help you to avoid tainting your credit report as this would really make it hard to obtain some loans. However, there are some situations where the amount you get as debt relief can be taxed and this means that you will have more tax debt to settle for the year in question.
How does one end up getting debt forgiveness in Canada?
Debt forgiveness is not something that happens just like that as doing so would form an easy way out for most debtors as they would go for such immediately they experience some difficulties in handling their debts. The creditors usually utilize any means possible to get the amount owing and they can wait for any period of time provided there’s some hope that the financial condition of the person involved will eventually take a positive turn.
Some of the actions that creditors can take before deciding on debt forgiveness include:
- Sending the account of the individual involved to collections
- Going for less than the amount owed
- Taking legal action upon the debtor
Some of these ways of moving the debtors to settle the owing amounts can be pretty expensive in the long run for example the creditors may still not get full repayments even after suing the debtors and sometimes they may even end up spending more than what the debt is worth. There are even debtors who take legal action to stop collection calls from their creditors.
In summary, debt forgiveness Canada can forms an easy for any Canadian citizen who really finds it hard to clear his or her existing debts. You may get full forgiveness for your debts or simply have some amount waived. However, this is not as easy as it sounds and therefore not every person will qualify. You can also go for debt relief Canada and benefit from some things like consolidating your debts, lowering your interest rates and protecting your assets among other things.