How to Avoid Bankruptcy and Still Get Out of Debt
Getting Debt Relief Without Going Bankrupt
This article will tell you everything that you need to know about this situation and the choices that you need to take.
It’s a fact of life that anyone can end up in debt.
While some are certainly more vulnerable to this issue than others, anyone regardless of age or lifestyle can ultimately find themselves with a significant level of debt that seems impossible to pay off.
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It can build slowly and may be caused by anything from a mortgage shortfall to bills being left for too long on the credit cards.
When you find yourself in this situation, you will need to consider your options.
It’s common to assume that filing for bankruptcy is going to be the best or even the only decision.
Particularly, if you have built up a substantial level of debt.
However, it’s important to be aware that bankruptcy isn’t quite the clean slate that many people assume.
If you file for bankruptcy rather than paying off the debts that you have accumulated, then you will lose the trust of lenders.
This means that they will have no incentive or reason to lend to you in the future.
You will also be left with very little even taking into account the assets that you will legally be able to keep hold of.
This is why it’s important to explore the ways that you can avoid bankruptcy completely.
There are options available to you here, regardless of how much debt you find yourself in.
Strategies For Avoiding Bankruptcy
It’s worth noting that if you only have a small level of debt or a few debts then you need to consider options other than bankruptcy.
Bankruptcy simply won’t be worth it in this type of situation.
While there may be no easy way out of the debt that you have built up, there are ways to get your finances back on track.
For instance, you can think about selling some of your assets.
This is going to happen with bankruptcy regardless so if you can take this step yourself, it’s definitely worth doing.
You might also want to think about cutting expenses where possible.
When you find yourself in debt, one of the first steps should be exploring is how you can limit your spending and cut it down to size.
There are always going to be options to tighten your budget.
Alternatively, you can explore ways that you will be able to build up your earnings, potentially with a second income.
What you’re looking for here is a side hustle.
You can use an extra cushion of cash from a side hustle to specifically pay off the debt that you have.
This will even allow you to double the payments that you are making to your creditors.
In doing so, you will be able to clear your debt far more quickly than you might have previously assumed.
You could also couple this with a negotiation.
Speak with your creditors to find out if you can agree on repayment terms that make it easier to pay back the money that you owe.
The aim here is to use these tactics to cut back on the money that you owe, pay off the debt as quickly as possible and avoid the burn of high levels of interest.
With the right level of management, you will be able to get even a moderate level of debt under control.
You do need to think about whether you have any current expenses that are unnecessary and wipe them clean from your budget.
This could be about cancelling subscriptions, cable TV and anything else that is eating into your money each month.
Don’t be afraid to ask creditors for a lower interest rate.
Remember, it’s more beneficial to them if you don’t claim for bankruptcy so they do have an incentive to do that.
What If You Have A Higher Level Of Debt?
It’s possible that you are dealing with more than a moderate or typical level of debt.
But don’t panic just yet and don’t start the process of filing for bankruptcy.
There are other possibilities.
For instance, you can think about borrowing from friends or family members.
The benefit of doing this is, while you will still owe money, you won’t be paying interest.
Interest is often the real killer for people who are struggling to pay off creditors.
There are also official options that you can explore that will allow you to get rid of your debt or make it easier to afford.
For instance, you might have a great credit score.
If that’s the case then you could qualify for debt consolidation.
With debt consolidation, all the debts that you owe to different creditors are paid off through a second loan.
Crucially, the second loan has a lower level of interest.
As such, you won’t have to worry about the amount you owe increasing dramatically over a short period.
A consumer proposal could also be beneficial.
With a consumer proposal, you can present an offer to your creditors.
This will reflect what you can afford to pay and how quickly you will be able to pay that amount off based on your earnings and your budget.
If creditors approve your proposal then you will be free from your debt within a few years.
You just need to make sure that the plan that you have set out is actually affordable.
Alternatively, a debt management plan can be helpful too.
Here, you will sit down with a professional and discuss your financial situation.
They will work to ensure that your debt can be managed more effectively and that it stops being a massive burden on your life.
We hope this helps you see that there are ways to deal with a high level of debt without filing for bankruptcy.
If you need additional help, contact us today and a friendly member of our team will support you in gaining full relief from your debt.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
How to File for Bankruptcy
What is Bankruptcy?
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?