Can I Get Out of Debt Without Going Bankrupt?
Are you dealing with debt and looking for a way out?
You might think that bankruptcy is your only option but this guide will show you that’s not the case.
It’s true to say that anyone can end up in debt.
It doesn’t matter how much money you have or what position you hold.
Debt can thrive if you just make a few bad decisions or potentially run into a little bad luck.
Contact a Licensed Trustee for a Free Debt Relief Evaluation
It can build slowly too so at first you may not even notice the issue.
It creeps up on you, like a sickness taking over the body.
Before long, you’re completely submerged and struggling to breathe.
Debt can make it feel as though you are suffocating.
It’s then that you’ll start looking for an escape from the situation and you might think that filing for bankruptcy is your only way out.
However, there are issues with bankruptcy.
While it doesn’t leave you with nothing it will hit your credit rating hard, make you look untrustworthy to future lenders for years and put you back at square one.
Luckily, there are alternatives that you can consider.
Can You Cut The Costs?
Your first step should always be exploring whether it is possible to cut the costs in your life.
This is all about setting and breaking down your budget to the point where you can make some great, positive changes.
There are certain parts of your budget that are fixed and that you won’t be able to change.
For instance, there’s the rent and the mortgage.
While you might be able to speak to your lender or landlord, they probably won’t be able to do too much for you.
However, there are options to consider here.
For instance, you limit your spending on luxuries and even explore ways that you can cut down on the basics like food.
Every little will help and it’s an option worth exploring if you are dealing with what could be classed as a modest level of debt.
What About Contacting Creditors?
The initial instinct when you’re dealing with debt will be to avoid your creditors completely.
You might hope that if you avoid them the problem will go away which of course never works.
Instead, the problem builds and builds to the point where they come looking to collect.
Remember, once you start missing payments penalties will begin and your costs will increase.
If you know that you’re not in a position to pay the debt back, then it can be worth explaining it to your creditors.
Some of them may be able to work something out with you and could even give you more time to pay back the debt.
That’s useful particularly if they cap or reduce the interest because you’ll have more time to pay it all back.
Creditors are not legally obligated to help you but there is an incentive here.
They are more likely to get a greater return if you don’t end up in bankruptcy.
So, they could be willing to help you out in certain situations.
There is a range of official alternatives to explore as well.
For instance, you can think about debt consolidation.
The benefit of debt consolidation is that you will be able to pull all your debts together so that they form one payment.
This makes them easier to manage and it can also ensure that they seem far less threatening which is great.
You might also want to think about the interest rate here.
Debt consolidation is basically taking out one large loan to cover all your debts to creditors.
The biggest benefit is always going to be the interest rate but you will still need to pay back all the debt that you owe.
It will just be in a different form.
If consolidation isn’t the right choice for you, then it could be worth contacting a licensed insolvency trustee.
If your debt isn’t at an extreme level then they could offer you a consumer proposal.
A consumer proposal is basically an offer to creditors based on what you can afford to pay within your budget and financial limitations.
It takes everything into account including your income, assets and monthly spending.
When the proposal is put forward to creditors they can either reject or accept it.
If they accept the offer then you can immediately start the process of paying a percentage of your debt back.
The rest is wiped clean.
This does damage your credit rating for a fixed period.
However, it does not have the same impact that filing for bankruptcy will.
It’s also worth noting that when you file a consumer proposal all action to collect the debt must stop within days.
This can immediately give you not just financial relief but stress relief from the problems this may have caused you already.
Alternatively, there are also credit counselling services available through Canada.
On one of these plans, you will be able to negotiate the debt that you currently owe with your creditors.
This can lead to them reducing the debt or lowering the interest rate.
Be aware that unlike consumer proposals, most companies that offer this possibility are working for a profit.
As such, it’s not as clean-cut as the other possibility.
However, it can still be beneficial.
You just need to be wary of false promises that are too good to be true.
Furthermore, unlike in the case of a consumer proposal creditors will never be legally obligated to work on a debt settlement solution.
They will only do so if they see a benefit for them.
Get Help Now
Are you struggling with a seemingly insurmountable level of debt?
We can help and will provide the expert support you need.
Complete a free evaluation now or contact us today and a friendly member of our team will be happy to assist you.
We have helped more than 100,000 Canadians claim debt relief and we’re confident we can assist you too.
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?