If you’re saddled with debt that you don’t know how you can pay off ? you may be questioning what your next financial steps should be. How can you get a handle of your debt? Is it even possible? If you’re struggling with debt, you may be considering a couple of different options: bankruptcy or credit counselling. But what do each of these mean, how do they work, and are they right for you? Read on to find out more about whether or not to choose bankruptcy or credit counselling and why? Plus, find out what other options you didn’t know you have, as well.
Bankruptcy or Credit Counselling: What Do They Mean?
It is common for those in extreme debt to consider bankruptcy or credit counselling in an effort to get a hold of their financial situation. However, too many Canadians opt for one of these choices without fully understanding what they mean and how they can affect you. If you are struggling with debt, you won’t want to miss this article. Here is a closer look at what each of these scenarios are all about and how they can affect you financially in the long-term.
Bankruptcy
Bankruptcy should definitely be viewed as your final and ultimate last resort. There is no coming back from bankruptcy – at least not for seven years. And even then, there are some consequences that never fully disappear from your credit file.
Bankruptcy relieves you of all debts owed. It also offers you protection from creditors so they can no longer come after you or hold you accountable for repayment of the funds. But it won’t relieve you of all government debts. For example, if you owe money to the CRA, you may not be able to have that amount lifted, even if you file for bankruptcy.
Bankruptcy isn’t as simple as it seems either. You must have a trustee – a licensed third-party insolvency trustee – submit the request on your behalf. If the powers that be determine you do not meet the requirements for bankruptcy, you may be refused. you are accepted, you should note that filing for bankruptcy several times is not often accepted and will encourage the government to open an investigation to determine whether or not your bankruptcies are fraudulent or legitimate. Moreover, If found to be fraudulent, you could be in very hot water – legally speaking.
If you complete your insolvency, you will not be able to apply for a credit card. You will not be eligible for any loans and your credit file will reflect the bankruptcy for seven years. Anyone who needs to complete a credit check on you will see this, including prospective employers and landlords.
Credit Counselling
Credit Counselling services basically offer you financial advice. A credit counsellor can assess your debt, create a budget for you, and even negotiate your amount owed to certain creditors. Don’t expect the CRA to reduce your debt anytime, but utility companies may be more open to the idea. They can help you manage your budget so you are able to pay everyone off.
Applying for credit counselling will not impact your credit score so this may sound very tempting to many consumers, but buyer beware. There is definitely an impact on your credit score once you begin following your new plan, also known as a Debt Management Plan (DMP). For example, meeting with the counsellor won’t affect your credit, but if they get some debts settled on your behalf, your credit score will be impacted. If they get creditors to accept less than the minimum payment from you each month, your score will be impacted. Over and over again, your credit score will be affected.
In some cases, it’s short-term pain for long-term gain. However, you have to be able to assess whether or not your credit counselling plan is doable. A credit counsellor can give you financial advice based on the funds you currently have coming in, but they can’t give you money or help those debts go down. If you don’t have the money coming in to pay all these creditors, credit counselling services won’t magically be able to help you.
So, What Other Options Do I Have?
Many consumers consider credit counselling and especially bankruptcy as a last resort – and for good reason. They are your ultimate last choice. But you should know that there are other choices that will impact your credit less and get you out of debt sooner without having to give up your assets during a bankruptcy.
Instead of going around in circles with a credit counsellor or filing for bankruptcy, you can apply for one of any different loan products at BHM Financial. We can help you by quickly giving you access to the funds you need to pay your creditors off. Then, you’ll only have one single payment to make to get your finances back on track again. If you can barely afford your minimum payments, no amount of budgeting will get you out of debt – unless you suddenly double or triple your income.
Here is a closer look at the different loan products we offer that can help you get your debt problems under control:
No Credit Loan
If you are in need of funds to get out of debt or to stay out of debt, then you can apply for a bad credit personal loan with BHM Financial. Do you have bad credit? No assets to use as collateral? No problem. We never base our decision on your credit. We will base our decision to grant you the loan on your current income. This way, you can get the funds you need to pay down your debtors – fast!
Because we operate solo, we don’t need approval from any third-parties. We can review and accept your loan application request in as little as one business day and you can have your money in hand same day!
RV, Truck, Boat or Car Loan
If you own an RV, truck, boat or car that is paid off, you can use it as collateral to get the funds you need to pay down your debt. If you are considering bankruptcy, you should certainly consider a loan like this instead. Essentially, you are using something you own and turning it into the cash you need to get creditors off your back. This will have a way smaller impact on your credit and help you get your finances back on track sooner.
Home Equity Loan
If your home has equity, you can leverage that to borrow money to pay off your debts. An advantage to this loan is that can take your unsecured debts (like credit card debt and other consumer debt) and turn it into secured debt. If you have unsecured debts, your credit score is affected. Once you borrow the money against your home to pay off those debts, your credit can’t be affected by it anymore. The debt on your home is a secured debt and does not have an impact on your credit rating.
Remortgaging your home may have an initial impact when you apply for the loan, but it will not continue to impact your credit as long as you are paying the debt. In addition, BHM Financial can help you design a repayment plan that actually makes sense with your income and your lifestyle so you don’t run the risk of missing any payments. Instead, we make sure you can make that payment, so you can free yourself of the financial strain and continue to live your life and raise your family.
Debt Consolidation Loan
Do you owe money to many different creditors? Are the monthly minimums too much to keep track or, worse, too difficult to pay? This is a recipe for financial disaster. Just keeping up-to-date with what needs to be paid is enough to stress anyone out. Eventually, the minimums here, there and everywhere become too much and you stop making them. Once that happens, your credit is being affected each day.
A consolidation loan will give you the funds you need to pay off all of those creditors so you don’t have the hassle of keeping track of dozens of payments and missed payments anymore. Plus, once you consolidate, you’ll notice you’ll actually save on interest in the long run, pay your debts faster, and stay much more organized.
Business Loan
Are you hoping to increase your wealth and pay down your debt by starting a new business? If you have a lot of debt and bad credit, it’s unlikely a traditional banking institution will give you money. BHM Financial can give you a business loan so you can get started on building your wealth. Eventually be able to kiss that debt goodbye for good!
Financial experts often suggest looking for ways to increase your wealth when you have debt. OR if you simply want to start saving for your future. But as the old adage goes, “it takes money to make money.” With a business loan from BHM Financial, you could be able to realize your dreams and build your business from the ground up, even if you’re saddled with personal debt.
How Do I Decide Whether to Choose Bankruptcy or Credit Counselling or a Loan?
Making financial decisions can sometimes be tough. The last thing you want to do is act too quickly, without thinking your options through. You also want to avoid making decisions if you aren’t informed or very financially-savvy.
Before you make any decisions, meet with a financial expert at BHM Financial. Our expert staff can help you understand each of the available options you have so you figure out which really is the best solution for you. Each situation is different so the best way to make the smartest move. To understand all the possible moves and the consequences of each.
Once you meet with a BHM Financial expert, we’ll help you understand your options. Weigh the pros and cons of each, and help you develop a budget for the future that can help you get out of debt – and stay out!
What Happens if I Don’t Repay My Debt?
If you’re really down on your luck, not able to pay back your loan, and your credit is already down. You may be thinking that it really doesn’t matter if you simply don’t pay the debt at all. Unfortunately, this isn’t the best decision for you. If you don’t pay your debts at all, you will soon find yourself in much more trouble. If you owe a debt to the CRA, for example, you don’t have that option. The CRA can and will legally seize your assets and even seize your pay directly from your employer. There are also legal consequences, including fines and jail time, for not paying back your CRA debts at all.
Any other loans will land you in collections. A collections agency may call you however long they need to. This means in a decade or even two decades, they can still track you down and hassle you. They can call your loved ones, friends, and even your employer to ask for updated contact information. They can’t get the funds from you, but they can certainly be a thorn in your side.
The other downside is that your credit will never recover so long as you have an outstanding and completely unpaid debt. A bad credit score can keep you from getting a job, securing housing, or even getting a credit card or loan from a banking institution. Your credit cards will cut you off so you will no longer have access to credit if you are face with an emergency. Bad credit will hang around and follow you wherever you go.
No matter how bad your situation is, simply not paying off your debts is not the right answer. Instead, you should seek help from a financial expert to find out how to get rid of this debt that’s holding you down as quickly as possible. The stress alone of owing money can take a huge toll on your health. The best course of action is to meet with a BHM Financial advisor. Find out how to get your debts paid off and under control.
Life After Debt
It may seem impossible, but we promise, there is life after debt. Once we help you clear your debts and reduce your payments and interest overall. We can help you get your finances in order. It may be a long road ahead but financial recovery is by far your best option. Whether it’s a loan or bankruptcy or credit counselling, there is definitely a plan for you.
If you are unsure where to turn or where to start, give us a call so we can help you. Regroup and get on the path to financial freedom today! Hard times have hit millions of Canadian this year. You are not alone. And we have the solutions you need to finally turn this around – right as we’re about to open up the economy again. Get the job market rolling as it was prior to March 2018.
Why Should I Trust BHM Financial?
You may be skeptical of any lender, but once you meet with our team, you’ll understand exactly why you should trust us to help you. We understand your debt problems like most other lenders don’t – or don’t care to. We know debt isn’t always due to poor financial decisions. Sometimes it’s due to an unexpected illness, job loss, or other major life event that you simply weren’t expecting. You may have had a contingency fund but when you’re raising a family during a global pandemic, a contingency fund won’t last too long.
Sometimes debt happens and as a result, your credit score drops. That doesn’t mean you aren’t qualified to get a loan. Everyone deserves a chance to get their finances back on track and get out from the debt that is holding them back. That’s why we base our decision to loan you money on your income and not your past.
Our experts are also experience with many financial issues. They can help you discuss all the available options and break everything down to you in laymen’s terms. And because we know you still have to continue while you pay down your debt. We work together with our clients to develop a repayment plan that actually makes sense for you. We want you to be able to meet those minimum payments so you can start repairing your credit. Get on track to financial freedom.
At BHM Financial, we also understand that debt, loan products, and financial understanding isn’t always easy to digest. Our job is to break down the tough stuff and explain it to you so you aren’t just signing a contract blindly. We are here to educate and help you get back on your feet. Financial freedom starts with understanding finances and it starts with BHM Financial.