Bankruptcy Alternatives in Vaughan
Bankruptcy can work for some people. However, it may not be the right choice for the financial issues in your life. In fact, bankruptcy is often the most extreme option, and it involves a lot of disadvantages as well.
What bankruptcy doesn’t cover.
One of the most significant disadvantages of choosing bankruptcy over the other options is that it does not cover every type of debt. This means you can go through the process of bankruptcy and still have some significant debts to your name.
The first type of debt that bankruptcy won’t cover is student loans. That is the money you borrowed to pay your tuition and living costs while at college. Bankruptcy will also not write off debts that you are required to pay for things like spousal support or child support.
Finally, choosing bankruptcy means that secured debts such as car loans or home mortgages will also not be covered by the agreement. Therefore bankruptcy may not always be the best option.
Bankruptcy takes 9 months!
Bankruptcy is not a brief process to be involved in either. Usually, it takes around 9 months from beginning to end, although this is only if your case is relatively uncomplicated.
The process will involve many stages, not least recording financial counselling from your trustee. You will also be required to hand over assets to your trustee. Then can then seel these, and the money earned from these can be used to settle some of your debt.
However, if your bankruptcy is complicated and the debts owed and assets possessed need clarifying, you may require court involvement. Your trustee, your creditors, and even the Superintendent of Bankruptcy can also dispute your bankruptcy settlement, something that can elongate the process even further.
Bankruptcy can damage your credit rating.
Before entering into bankruptcy, you must know of the damage that such an action can have on your life in the longer term. In particular, the effect that bankruptcy can have on your credit rating.
This is because a note will be placed on your credit score concerning your bankruptcy. It will remain there for around 7 years, and it will also cause your rating to decline. This can be a real problem for many because it sets you up to appear as a higher risk to any potential lenders. Something that means securing a mortgage or a large scale loan for a vehicle can be tricky during this time.
Alternatives to bankruptcy.
Fortunately, bankruptcy is not the only option when it comes to dealing with debt. In fact, there is a range of others, as you can see below.
Consolidation, or settlement?
First of all, let’s take a look at debt settlement options. These involve getting a provider to help you negotiate a reduction in what you owe to your creditors. Therefore you have to pay less to clear your debt. Settlements can also be a good move for whoever has lent you the credit as they are guaranteed to get at least a portion of what they are owed back.
The only problem with debt settlement is that they require a lump sum to be paid to the creditor. Something that means they are not suitable for everyone.
Alternatively, you may wish to consider debt consolidation. This differs from a settlement because no lump sum is required. Instead, a provider will gather up what you owe into a single debt. Something that allows them to charge you a smaller monthly amount, and therefore makes paying your debts off much more affordable.
One of the most significant advantages of consolidation is that it can work very well for people who struggle to get credit because of their debt. The reason being that it is not regarded as a traditional loan.
Other alternatives to bankruptcy
If a consolidation or settlement isn’t quite suitable, there is another option to consider before you decide on bankruptcy. It’s a consumer proposal that works in a similar way to bankruptcy but doesn’t come along with many of the associated issues. In fact, consumer proposals often come with a much more favourable rate. They can, therefore, be better for your finances in the long term.
Your life, your choice
When it comes to declaring bankruptcy, it is your life and your choice. However, the processes and disadvantages involved can be particularly problematic. That is why you should carefully consider the other debt-relief options that are avoidable to you.
Of course, before you make such an important decision, you will want to be as informed on all the Bankruptcy Alternatives in Vaughan as possible. The good news is that you can get expert, non-partisan, and non-judgemental advice from financial excerpts on this subject.
Here at https://bankruptcycanada.com/, we can help you find the debt relief solution that best fits your life and circumstances. All you need to do is call us on 1-877-879-4770 or complete the enquiry form below.