Bankruptcy Alternatives in Toronto
Do you really need to claim bankruptcy?
Claiming bankruptcy can be an effective way to eliminate debts that you simply can’t pay off. Whether it’s due to unfortunate circumstances or due to your own lack of budget management, there are several different reasons why you might end up in debt. Luckily, claiming bankruptcy means you can still keep some of your possessions, such as your car and work items, to ensure that you have a chance of recovering from your financial burdens.
However, most people don’t realize that bankruptcy isn’t the only solution for overcoming debt. While claiming bankruptcy in Toronto does come with many advantages, it’s a long-term investment that requires a lot of consideration before you decide on it. For example, bankruptcy can only help with certain types of debt such as:
- Secured debts, such as a mortgage or car loan.
- Student loans that are less than 7 years old.
- Child and alimony support payments that are not up to date.
In addition, if you have any outstanding credit card bills, your lenders might block your bankruptcy claim and ask you to pay a certain amount of that debt before you can continue. This is to stop people from taking out large sums of credit and then claiming bankruptcy to effectively eliminate it.
Claiming bankruptcy can also make it difficult for you to take out loans in the future. This can include a mortgage, car loan or even a personal loan. This is because claiming bankruptcy in Toronto can leave a stain on your credit report that can take a long time to recover.
The bankruptcy process isn’t as simple as you think
To make things even more difficult, the bankruptcy process in Toronto isn’t as simple as you might think. In fact, the process can often take a minimum of 9 months, meaning it’s not a quick solution to erase your debts. You’ll also be expected to pay different fees and there are costs associated with claiming bankruptcy. As you can see, this isn’t a simple or free solution to erase your debt.
You’ll also have several different responsibilities to take care of. For example, you’ll need to attend mandatory credit counselling sessions to educate yourself on how to manage your budget and credit in the future, and there may be delays depending on how much money you owe and to which creditors. Your claim might also be delayed by different people such as trustees, creditors, the Office of the Superintendent of Bankruptcy or even the court. This will depend on your financial situation and the proof that you have presented to reinforce your bankruptcy claim.
As you can see, there are a number of complications when it comes to claiming bankruptcy. The process isn’t as simple as just filling in a form and calling it a day. You need to invest a lot of time and some money to ensure that the bankruptcy claim goes through smoothly. Even then, the amount of time it takes to file for bankruptcy might put some people off, so it’s definitely not an overnight solution.
So what are the alternatives to bankruptcy in Toronto?
If the idea of claiming bankruptcy is slightly off-putting then there are a number of other solutions available.
- Debt consolidation is a popular option that consolidates all of your debts into a single monthly repayment. This is essentially a loan that you apply for which pays off all of your existing debts, and then you only pay back that single lender. You’ll need a fairly good credit rating to apply for this since it’s a loan, but it can be an effective way to reduce deal with multiple different interest rates that could be costing you a lot each month. One thing to note is that you don’t borrow more money with debt consolidation since you’re paying it back immediately. This means that bad credit won’t become an issue.
- Debt settlement essentially means paying a portion of your debt and then considering it settled with your lender. This requires you to negotiate with your lender, but in most cases, a trustee will handle negotiations for you instead. This sounds like a bad deal for the creditor, but you’ll be surprised at how many lenders actually accept a debt settlement. There are many factors involved here, so it’s best to contact a specialist to learn more about the process.
- A consumer proposal is another popular bankruptcy alternative that has a fairly high success rate and works similarly to both consolidation and settlement in a single process. First, it involves reducing your debts by a certain amount. Next, you’ll negotiate payment for the remainder. In many cases, you can reduce your debts by up to 80% and then pay the remaining 20% over the course of five years. This means a $40,000 debt could be reduced to monthly payments of $200 over five years. This requires your trustee to negotiate on your behalf but has the potential to be one of the most effective bankruptcy alternatives available to you.
At the end of the day, some people might have no choice but to choose bankruptcy if the alternatives aren’t available to them. Whatever your financial situation is, there are plenty of trustees and specialists in Toronto that can help you search for the best solution for your debt. Whether it’s helping you through the bankruptcy claim process or deciding on the best bankruptcy alternative for your situation, we’re more than happy to assist you with your financial concerns.
If you’d like to learn more about bankruptcy alternatives in Toronto or are interested in starting the claims process, don’t hesitate to contact us today for more information. We’d be happy to answer any of your questions or concerns and would be glad to lend you a helping hand.