Bankruptcy Alternatives in Brantford
No one wants to file for bankruptcy. Yes, it’s a debt-relief option, but it’s always seen as the last thing you should opt for. Bankruptcy will stay on your credit report for at least 6 years, meaning you have to work hard to rebuild your credit. It’s also a rather stressful process that involves legal proceedings lasting 9 months at the very least.
So, why do people file for bankruptcy?
For some, it is genuinely the only option to deal with insurmountable debts. However, some people may go down this route because they’re not aware of the other solutions. As such, finding bankruptcy alternatives in Brantford can help you find the best possible path to deal with your debts.
What is bankruptcy?
Put simply, bankruptcy is a legal process that allows an individual to relinquish their unsecured debts. In essence, your debts get wiped out and you no longer have any obligations to them. Already, you can see why many people view this as an attractive idea. Why pay your debts when you can default them?
Well, as mentioned before, bankruptcy affects your credit report for many years. It’s not worth dealing with this for 6 years if you could pay your debts. It will surprise most of you to realize you may be able to pay off all or some of your debts by seeking out alternative solutions to bankruptcy.
Furthermore, it’s highly common for people to sell assets as part of the bankruptcy process. If you have a lot of equity in your home or car, the court may order you to sell them to pay your creditors. So, even when you actually can’t afford to repay your loans, bankruptcy isn’t always ideal. It can leave you with limited assets, while some of the bankruptcy alternatives let you hold onto them.
Does bankruptcy cover all debts?
No. It will cover most unsecured debts, but there are some debts that don’t get included in your bankruptcy:
- Secured debts – like mortgages.
- Student loans – only if they are under 7 years old.
- Any child or alimony support payments you’re behind on.
- Recent credit card debt – ‘recent’ is determined by the credit card company.
If any of these debts are causing issues, then bankruptcy won’t be able to help at all. Unless you also have unsecured debts, in which case you can clear them, making it slightly easier to deal with all of the above.
Bankruptcy Alternatives in Brantford
Don’t worry, you can pursue other debt-relief options in Brantford. Here are some of our top recommendations to look at instead of filing for bankruptcy:
Consolidation & Restructuring
These two ideas go hand-in-hand or can exist separately. Debt consolidation is where you find ways to bring all of your debts together. A debt consolidation loan is the most common way of doing that. The loan covers your debts, and you can pay all you owe in one go. With your creditors off your back, you can repay the new loan. It tends to offer a more flexible repayment schedule with much lower interest rates.
Restructuring is where you change the terms of your loan. You may ask to extend the duration, allowing smaller monthly payments over a longer period. Or, you could ask for interest rates to be lowered or removed. Creditors sometimes restructure debts as it is the best way for them to regain as much money as possible. You can often restructure debt and then use debt consolidation to pay it off.
Debt settlements are agreements between you and your creditors. You tell them you’re unable to repay the debts because your financial position has declined rapidly. Instead, you can make a single payment that covers a fraction of the debt. It’s not ideal for your creditors, but if they know you’re bordering on bankruptcy, they may accept a settlement. Why? Because they know they’ll get even less if you did go bankrupt.
This is the legal alternative to bankruptcy. A consumer proposal is a more extreme debt settlement. You propose a figure to your creditors and make monthly payments to them. Again, it helps you repay a percentage of your debts if you can’t pay them all in full.
We Can Help You Find The Best Bankruptcy Alternatives in Brantford
Which bankruptcy alternative is best for you? Call us today, and we will schedule a consultation that looks at your debts and assesses your financial situation. From here, we help you devise the perfect action plan to avoid bankruptcy and deal with your debts. If you can’t call us, then we have an online evaluation form that takes a couple of minutes to fill in!