Managing debt can be challenging, especially when you bury yourselves under the mountain of bills. Many Canadians face the difficult decision of whether to file bankruptcy or seek an alternative. Luckily, there are several alternatives that can help you find debt ease without filing bankruptcy and regain financial stability. In this blog, we will discuss bankruptcy, alternatives of bankruptcy and guide you through your debt.

Understand Bankruptcy

Bankruptcy is definitely an easy alternative, but two major cons are there you need to be aware of. It will become a public record and also cost association when you apply for it. It will affect your credit score and also take a minimum 9-month period to complete all processes. Applying for bankruptcy in Canada costs you at least $1800. This fee is payable to the trustee at the time of filing, additional fees depend on how much they charge you for their services, as determined by the Office of the Superintendent of Bankruptcy.

A bad credit score restrict you from obtaining additional loans in future or if you do, you must pay a higher interest rate for it. Secured debt (car loan or mortgage), student loan (if they are less than 7 years old) and child and alimony support-these are three kinds of debt that are excluded from bankruptcy.

Bankruptcy is not an option for everyone or in every situation; there are many more options available to help you come out of your debt. Each alternative of bankruptcy is suitable for different situations and each has their own advantages and disadvantages. Before making any decisions, it is best to consult a debt adviser, as they can provide optimal guidance.

Explore Alternatives

1. Consumer Proposal

One of the popular alternatives of bankruptcy, it is a formal and legally binding process regulated by the Licence Insolvency Trustee (LIT) with your creditor to repay your debt portion within a specific time period. Unlike bankruptcy, you can retain your assets and simplify your debt management. It will affect your credit score, but less severely than bankruptcy. All you need to do is make sure to get a licensed trustee.

2. Debt Consolidation Loans

If you are jab in between multiple small debts, you might apply for a debt consolidation loan. It will merge multiple debts into a single loan and a single monthly payment, usually at a lower interest rate. Managing multiple payments with a single payment loan will ease your debt crisis and help you get back on track easily. There is a con while apply for this loan; you are required to have high credit score to.

3. Debt Management Plans (DMPs)

A well structured path for your debt mountain. DMP is a voluntary agreement with your creditors to repay your debt over a typical period. It will be facilitated by the credit council; they can solve your debt problem quickly and help you to fix your credit score. If you are having problem keeping up with your payment, simply contact them and they will arrange a structure for you to pay them and they will distribute all payments. It will involve higher fees but it is a better alternative to bankruptcy.

4. Credit Counseling

A professional guidance for debt relief, credit counseling agencies offer free or low-cost financial advice and services to help you manage debt. They can help you in creating a budget, negotiating with your creditors and developing a debt repayment plan. Also, they will educate you about managing your funds in order to avoid the debt issue and have a strong financial future.

5. Informal Arrangements

Try negotiating with the creditor on your own. You can explain clearly to them about your situation and offer them with reasonable repayment plans. In most cases, creditor understands genuine situations and work with you to avoid bankrupt and settle all debts as per plan.

Choosing the Right Path

Create a strong financial background and plan strategic budgeting to avoid this kind of situation. Yet, if you fall into this situation, the Government of Canada offers a program to help individuals in their financial disaster. Canada Emergency Response Benefit (CERB) provides you temporary income support and Employee Insurance (EI) will provide financial support in case you lose your job.

The best alternative to bankruptcy is depends on your situation and debt; before choosing, consider your debt, financial status and future goals. A credit counsellor or financial adviser can provide you valuable guidance on it.

By considering the above alternative of bankruptcy or consulting with our trusted Credit720 credit counsellor team, they will guide you through all alternatives. You can find debt ease without bankruptcy and take control of your finances.