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What is creditor

Negotiating with creditors is a solution for temporary debt problems that avoids provisions of the Bankruptcy and Insolvency Act (BIA). This is an informal proposal in which an agreement is negotiated directly with creditors in order to reimburse what you have borrowed at a level suitable for your capacity to pay.

How does creditor negotiation work?

It’s up to you to negotiate directly with each of your creditors
Creditors are free to accept or reject your offer.
You pay back your creditors according to the terms agreed upon.
Some tips about creditor negotiation.

Negotiating an agreement with your creditors is a good solution which will allow you to solve your financial problems in the short term. However, it may be difficult to use this solution because creditors are under no obligation to accept your informal proposal.


In any case, they will be more inclined to accept an agreement if you have a good credit file, have few debts and stable employment. If you have a good relationship with your creditors, your chance of reaching an agreement with them is better.

What are the advantages of creditor negotiation?

If a creditor has not signed a written agreement, only accepting an informal proposal verbally, it can always change its decision and cancel the agreement at any time. For better protection, a written agreement signed by the creditors that mentions each detailed clause is recommended. This document is your only protection in a creditor negotiation.

What are the advantages of creditor negotiation?

Negotiations can be quick if there are few creditors.
Allows for extension of the payback period.
Takes into account your capacity to pay back.
No impact on your credit rating.
Flexible solution adapted to your financial situation.
Allows you to avoid bankruptcy.
Ideal for temporary debts such as credit card balances.
Disadvantages of Negotiating With Creditors

Negotiating with creditors carries certain risks:

  • The process is not subject to the Bankruptcy and Insolvency Act
  • It does not protect you from recovery measures
  • Creditors are not obligated to accept your proposal

Is creditor negotiation the right solution for you?

Creditor negotiation may be a viable solution if:

  • You have few creditors.
  • Your debts are not very high.
  • You are going through a temporary situation that is affecting your finances, such as a temporary lay-off.
  • You have good business relationships with your creditors and they have confidence in you.
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