Filing for bankruptcy is usually a last resort when you are struggling with debt.
Although bankruptcy can give you a clean financial slate, it’s necessary to consider what other options are available before deciding to take the step to file bankruptcy.
If you want to avoid bankruptcy, there are things that you can do to reduce your debt.
By getting your finances together, you can start to steadily pay off your debts and make them more manageable.
There are also debt relief services that can help you to reduce your debt without the need to file for bankruptcy.
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Start By Making a Budget
If you don’t already have a budget, you need one if you want to be able to tackle your debt.
It helps you to get a clear picture of what you’re spending, and how you could save some money while making repayments for your debts.
Your budget should include all of your expenses so that you can account for everything that you spend.
Keep track of what you spend each month and stick to your budget as much as possible.
You can also look for ways to save on your expenses, such as reducing your utility bills.
Choose a Strategy for Paying Off Debts
There are a few strategies that you can use to start paying off your debts in a steady and methodical way.
By choosing the right strategy, you can pay off your debts quicker and save money on interest.
One option is to focus on paying off the debt with the highest interest rate first.
You could also pay off the largest debt or the one with the highest monthly payment.
This method of paying off your debts can help you to save on interest by getting rid of the bigger debts first.
Another option is to start with your smallest debts and work your way up to paying off the larger ones as you finish paying for the smaller debts.
You might decide to pay off your debts this way if you like seeing quick progress.
You’ll be able to see your small debts paid off fast, and then you just need to put in the time and effort to pay the remaining ones.
When you track your progress, you’ll be able to see the difference that your strategy is making.
Look at Debt Solutions
If you want to reduce your debt but avoid bankruptcy, you can benefit from exploring some different debt relief solutions.
There are professionals you can speak to, such as credit counsellors and trustees, who can offer you advice based on your financial situation.
You might be able to use methods such as debt consolidation or a debt management plan, which will help you to organise how you pay your debts.
It could even allow you to reduce the amount that you owe so you can save money.
Bankruptcy Canada can help you with financial advice from qualified trustees, as well as our online resources.
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?