Bankruptcy Alternatives in PEI
We can all get into debt, so if you are currently struggling to pay back money owed, know that you aren’t alone. According to the news media, consumer debt is on the rise, so you might be just one of the thousands of people struggling to manage because of your debt problem.
Thankfully, there are ways out of the debt trap you have found yourself in. Bankruptcy is one solution, and for many, this has been the right option to consider. Especially when you are overwhelmed by debt, and with no possible way of paying it off, bankruptcy can give you the fresh start you need. However, there are bankruptcy alternatives in PEI, and these are worth considering when you are considering the options before you.
We will take a look at some of the bankruptcy alternatives below. So, if you a Prince Edward Island resident, and if you are currently feeling the strain of the debts that are hindering your financial life, consider the options that are available to you, and then contact our Bankruptcy Canada firm to discuss them in more detail.
Bankruptcy Alternatives In PEI
When you seek help early, you will find that you have more options available to you than bankruptcy. At a stage when paying back your debts is still possible, you might want to consider the following.
A Debt Consolidation Loan
A debt consolidation loan is an excellent bankruptcy alternative in PEI. By reorganizing your debts into one easier-to-pay loan, you will have fewer creditors to worry about and have the chance to pay off more than just the interest on your loan. Consolidation loans have an interest of around 10%. When compared to the interest usually heaped upon store cards, credit cards, and payday loans, this is certainly more cost-effective, and so you should have the opportunity to clear your debt faster.
Another advantage of a debt consolidation loan is that your credit score will be positively affected. This is because you will have effectively paid off your other debts with the new loan. However, it is worth noting that if your credit score is currently very low, you may be turned down when applying for a consolidation loan. If so, there are other options available to you, so don’t despair.
A Debt Management Plan
A debt management plan forms the basis of an informal agreement you make with your creditors to pay off your debts. If your creditor is in agreement, you will have the opportunity to pay off your debts through reduced monthly payments, and in some cases, you might be able to reduce or eliminate the interest that you were paying on the loan. A debt management plan is not legally binding, so it won’t appear on any public register. This means nobody else needs to know about your debt unless you tell them. However, because it isn’t legally binding, the creditor could pull out of the plan at any time, although if you stick to the payment plan you have agreed upon, they are unlikely to do this.
You are free to arrange your own repayment plan with your creditors, but as our experts at Bankruptcy Canada have experience of negotiating with a range of creditors, you might want to consider our services to ensure you get a fair deal. You should certainly consider this option if you don’t want to enter into another loan. Be aware that it might take you longer to pay off your debts with this option as you will be making reduced payments. Although if the creditor does freeze the interest, you will make more headway into paying off your debt, so you won’t be stuck making payments forever.
A Consumer Proposal
Unlike a debt management plan, a consumer proposal is a legally binding debt settlement agreement. For this option, you do need to work with a Licensed Insolvency Trustee, as they are licensed to handle this method of debt relief.
With a consumer proposal, you will agree to repay a percentage of what you owe to your creditors. This is an excellent bankruptcy alternative in PEI, as it means that you won’t be forced to pay back the entirety of your debt, and you will be free of your debt within 5 years. Acting as the administrator, your Licensed Insolvency Trustee will help you review your financial situation, and will discuss with you the amount of money you should be able to repay each month. They will then contact your creditors on your behalf and present the consumer proposal to them. If they are in agreement, interest and fees on your loan will be waived, and your repayment plan will begin.
Be aware that you will be in a legally binding agreement with your creditor. If you fail to stick to the payment plan set, the agreement could be revoked, and should this occur, you would be liable to pay back the full debt again. We will work with you to ensure the repayments are affordable for you, however, and with the budgeting plan we will support you with, you should be able to keep up with your payments. A consumer proposal will remain on your record for the duration of your repayment plan and for 3 years following your last payment. However, as you won’t have to surrender your assets, this is still a favourable alternative to bankruptcy.
To learn more about the bankruptcy alternatives in PEI, get in touch with our licensed team of trustees at Bankruptcy Canada. We will discuss the various options with you, including the possibility of bankruptcy, and will work with you to determine what the right debt solution is for you.
Call us at (877) 879-4770 or use this form to arrange a free consultation with a Licensed Trustee in the PEI area. The sooner you get in touch with us, the sooner your journey towards a debt-free life will begin.