Bankruptcy is not the Only Solution

Are you suffering from overwhelming debt problems? You may think bankruptcy is your only option but there are plenty of other things you can do before resorting to filing for bankruptcy. Find out more about all the debt solutions available to you and how you can get your finances back on track.

Why Avoid Filing for Bankruptcy?

Filing for bankruptcy may be necessary in a select few situations but it can be an option with many more consequences than you may think. If you can avoid bankruptcy, you should definitely try to. Declaring bankruptcy can wipe your debt clean and you will no longer be responsible for paying back that money. However, it will also have a lasting impact on your credit and can have other unfavorable consequences, as well.

For starters, you may lose your home or any other assets you have in your name. To successfully file for bankruptcy, you will have to agree to having your assets repossessed. If you own a home, this is not necessarily the best option for you. In addition to losing your assets, you credit report will reflect your bankruptcy for a minimum of seven years.

During those seven years, you will not be eligible for any loans, including a mortgage. You will also not be able to get a credit card in your name for the entirety of the seven years. Once the seven years have passed, you may be able to regain certain privileges again but your bankruptcy is still visible to anyone doing a credit check.

If you are looking for a job in a financial institution or government agency, you may be refused if you have a bankruptcy on your credit report. This means it can be difficult to get a better job to improve your financial situation due to the mistakes made in the past. Securing a safe apartment can also be a challenge with a bankruptcy on your credit report.

In short, declaring bankruptcy may be an option for some but it should be seen as a last resort. It’s also worth understanding more about the other debt solutions out there so you can decide which option is best for you. Un the end, filing for bankruptcy may not be your only choice.

Debt Solutions to Turn to

If you have a huge debt load, you may think that you are fresh out of luck. While filing for bankruptcy may be a viable option for many people, it isn’t always the only solution. Here are is a closer look at the various debt solutions you can turn to besides bankruptcy.

Debt Counselling

The first step is to look into credit counselling. You can get credit counselling services at any major financial institution or through an instant loan company. Financial advice given through debt counselling can be a gamechanger for many Canadians. A debt counsellor can help you manage your debt, spending, and financial habits better so that you can minimize the impact of your debt. In many cases, a lack of financial knowledge is a major contributor to financial distress.

Understanding how to spend, save and pay down your debts can help you get out of debt much quicker than you think. You may be reviewing your finances and feel so overwhelmed that you see no way out. But a third party – a financial expert – may see things differently and can offer you’re the counselling you need to get a handle on your debts. Before you consider the permanence of filing for bankruptcy, it is definitely worth having a consultation with a debt counsellor to see how you can manage your debts better.

Debt Consolidation

If you owe money to many different creditors, it can be very overwhelming. In addition to being stressful, owing money to several different agencies can be a really inefficient way of paying down your debts. Each creditor will have their own interest rates and some can be excessive. Credit card companies charge very high interest rates and utility companies may also do the same. If you owe money to many different creditors, you are paying interest that may seem small on an individual scale. But collectively, it adds up very quickly.

The best way to minimize you overall interest rate and minimize the number of payments you have to make is to consider debt consolidation. This is essentially a loan that allows you to pay off all of your creditors at once so you can get them off your back. Then you just have to pay ack the one loan. In most cases, the interest rate on your single loan will be less costly than the interest you were paying before to all the different creditors you owed money to.

Debt consolidation loans can help you get out of debt sooner, make your payment schedule much simpler to track, and ensure you aren’t overpaying on interest if you don’t need to be. Debt consolidation can be a very effective strategy for taking control of your debt and slowly getting rid of it for good.

Consumer Proposal

If you are struggling with debt and neither debt counselling nor debt consolidation have been successful for your given situation, you still have one final option you can try before you relinquish yourself to declaring bankruptcy. A consumer proposal can be filed with the government for you by a financial institution on your behalf. It is essentially a notice that you are unable to pay the debt you have on your shoulders and a request to settle some debts by either reducing the principal amount or eliminating it altogether.

A recognized financial institution can make the request on your behalf and the government will review and accept what they conclude to be reasonable. In other words, the financial institution will look at all of your debts and make a recommendation as to what they think you can reasonably afford to lay back. In some cases, your debt load can be reduced by as much as 80%. This will mean that you can be left with significantly less debt that will be easier to pay off. The government will then let the agencies you owe money to know that the debt load will be reduced and they will have to adjust accordingly. This process can take several months to complete.

Be aware that this does also impact your credit score and there will be a mention of the debt settlements on your credit report. This can have some adverse effects but generally speaking, the effects of a debt settlement through a consumer proposal will be less serious than a declaration of bankruptcy. It is not a perfect option but it is the least damaging to your financial future.

Debt Settlements

You can also try to minimize the impact of a consumer proposal and reach out to your creditors yourself to see if they are willing to settle their debts with you. A consumer proposal means the government will reach out to settle debt son your behalf, but there is nothing stopping you from trying the same on your own. This will still impact your credit but it to a significantly lesser degree.

For example, if you owe your cable company, electricity provider, and your cell phone provider money, you can call each one up individually and explain your financial situation. You can let them know that you cannot afford the entire amount. Tell them what you can afford to pay back and see if they are willing to make the change. You may be refused, but in many cases, providers are willing to accept less money rather than no money.

It costs nothing to try but be prepared for at least some of your creditors to refuse. Credit card companies, for example, are notorious for turning down such requests unless they are required to do so by the government. But you may be able to settle at least some debt with a few creditors by calling them up and asking. Anything you can do to reduce your principal debt is a step in the right direction.

How to Get a Loan with Bad Credit

If you are considering debt consolidation or remortgaging your home to pay down your consumer debts, you may find it difficult to do with a traditional banking institution if your credit is bad. They will see this as a risk and are very likely to refuse you. Of course, paying off your debt is more difficult if no one will allow you to consolidate your loans.

If you are unable to secure a loan through a traditional financial institution, you can try securing a private loan from independent loan companies like BHM Financial, Cash in 24, Quick Loan, Canoco Consulting, Trufo and more. These Canadian lenders offer bad credit loans that can help you get back on your feet while you deal with a financial stressful period in your life. Consolidating your loans will allow you to reduce your overall interest rate and help you finish paying off your debts sooner.

If you are unable to secure a loan, don’t despair. A private lender can help you get instant access to the funds you need to get your creditors to stop calling you for money. Even if you have a bad credit, you can still get a hold of your finances. Private lenders do not base their decision to lend you money on your credit score or your credit report. Instead, they base their decision to lend you funds on your actual income.

How Do I Choose the Best Debt Solutions for Me?

If you are unsure which of the available debt solutions are most useful in your specific situation, you should meet with a financial advisor or a debt counsellor. They can further explain to you the impact and the benefits of each debt solution you have. Depending on how much you owe, the value of your total assets, and your income, one debt solution may better suit you than another. Meeting with financial experts is a great way to get a deeper understanding of the debt solutions available to ensure you make the smartest financial decision for yourself and your future.

To best prepare for meeting with a debt counsellor or financial advisor or consultant, prepare al of your invoices. You want all of your debts to be clearly laid along with your pay stubs, assets, and bank statements. By going through all of your financial data, an expert can get an accurate sense of the situation you’re in and will be able to better advise you on how to get out of it with as little damage to your credit report as possible.

Financial experts can’t make miracles though so it may be that you will have to face some consequences with your credit score and report. But they will do their utmost to ensure the least damage necessary. Reaching out for help is the first step in gaining control over your debts and building your path to a successful financial future.

How to Avoid Getting into Debt Again

Getting into debt is sometimes unavoidable. For example, if you encounter unexpected job loss, war throughout the world, the pandemic – there are a multitude of reasons why troublesome times can occur on both a personal and national or global scale. However, there are things you can do to safeguard yourself from ending up drowning in debt if tough times do hit. Here are a few handy financial tips to keep in mind that can protect you from falling into debt.

Plan a Detailed Budget

You should always have a very detailed budget to keep track of incoming money, outgoing funds, savings and more. A spreadsheet with your budget outlined clearly can prevent you from overspending and can help you save more. Having a balanced spending-saving balance is imperative to leading a financially secure life.

Use your spreadsheet to track every cent that goes in and out. You’ll be able to see where you’re overspending and where you can cut if you are short on funds. You can also use your spreadsheet to calculate your savings over time so you will know how much money you can lean on. In the future when you retire. Remember, you can’t just build a budget. You have to stick to it, too.

Build an Emergency Fund

You should always have a randy fund for yourself. The general rule of thumb is to have at least six months’ salary tucked away in case you lose your job. This will ensure you can maintain your general living style even if you lose your job. It will afford you some time to find a new job and you won’t be at risk of losing your home if tough times hit. An emergency fund can also protect you if you fall ill unexpectedly or are hit with expenses you were not expecting. This can help prevent you from incurring debt to pay off necessary bills when you are in financial trouble.

Live Below Your Means

Spending every penny you make can make for a fun lifestyle – until tough times hit. If you are spending everything you earned then some, it is only a matter of time before you are drowning in debt. Living below your means refers to saving more than you spend and not always buying the most expensive items you can afford. It’s a lot easier to save money than it is to earn more of it. Being wise with your spending can prevent you from falling into debt.

Invest in Appreciating Assets over Depreciating Assets

Spending a lot of money on your home is not the same as spending a lot of money on a car. Try to invest money in assets that will increase in value over time and bring you more money. Investing in depreciating assets is quite literally spending money and never seeing it again. Instead of buying a luxury car, buy an average car and invest the extra money in a TFSA or the stock market or real estate instead. This will bring you more money down the road.

Learn About Finance

Many times, people wind up in debt simply because they don’t know how to make good financial decisions. Meet with a financial advisor or read finance books to get yourself up-to-speed on proper spending habits for a financially successful future. Spending and saving wisely can save you from making costly financial mistakes that you will be stuck with for years to come. Meeting with a financial advisor on an annual basis can help you understand more about finance and help you make more informed decisions as you plan your financial future.

Work More

Earning more money is an option you won’t be afforded in your old age. If you’re young and able, work as much as you can today. Earning more means more money to live off of and more money to save. You may not always be able to work more and earn more so take advantage of the opportunities you have whenever you have them. Earning more money when you are young and able to work can help you save up a larger emergency fund, save for your retirement, and even provide you with a source of income should your primary job fall through unexpectedly. You will never regret earning more money while you can.