Just like with any other topic, there are many myths about debt and debt solutions.
It’s not always easy to know what’s true and what’s false, and you can end up getting confused or even falling for some untruths.
It’s important to know facts from fiction if you are thinking about borrowing money or you need help to manage your debts.
If you don’t know what’s right and what’s wrong, you could get taken advantage of, or you could find that you make a big mistake.
There are lots of myths floating around, but Bankruptcy Canada can help you to get the facts straight.
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Fiction: Lenders Will Only Let You Borrow What You Can Afford
When you apply for any type of credit, lenders will carry out affordability checks to decide whether they want to lend to you and how much credit they’re willing to extend.
To calculate how much to lend you, they only have basic information to go on.
They will look at your income before tax, as well as your credit report.
However, they won’t take into account your expenses.
Fact: Only You Really Know What You Can Afford
The truth is that you are the best person to work out how much you can afford to repay each month.
While you might hope that lenders won’t lend you more than you can afford, they don’t get to look at every detail of your finances.
It’s up to you to know how much money you have to spare, as well as what you might do if any of your expenses increase or you lose some of your income.
Would you still be able to afford the payments that you will have?
Fiction: Debt Services Always Have Your Best Interests in Mind
When you need help with managing your debts, there are several types of debt solution services that you might consider.
They can offer similar services, and they all have the same goal of providing you with debt management services.
Although you might hope that they all have your best interests in mind, that might not be true.
Fact: Some Debt Service Providers Are Better Than Others
It’s important to keep in mind that not all debt service providers are the same.
Some are for-profit companies, while others are nonprofits.
Some provide services that require large fees to access, while others start with free consultations and advice.
You should look for a service that can provide the advice and support that you need without the premium cost.
Fiction: Bankruptcy Is Your Only Option When Dealing with Large Debts
When you’re insolvent and unable to make your monthly payments, you might start to think that bankruptcy is your only answer.
Bankruptcy usually means having to surrender some of your assets, although you are allowed to keep some of them.
Fact: A Consumer Proposal Provides an Alternative to Bankruptcy
Consider a consumer proposal if you want to keep your assets while resolving your debts.
It’s another legal process, like bankruptcy, that allows you to keep your assets and repay some of your debt.
Get more information about debts by speaking to a trustee.
You can find someone to speak to on our website.