4 Reasons to Reduce Your Debt and Avoid Bankruptcy
Bankruptcy is not something that is fun to talk about. People who have to claim bankruptcy have basically hit rock bottom and have no other option than to give up. It is far better for a person to take a look at their finances and reduce debt earlier in life than to wake up one morning and realize that there is no other choice but to go bankrupt. Today we are going to take a look at 4 reasons why you should avoid bankruptcy if at all possible.
- The emotional stress that comes from a bankruptcy can be overwhelming. Knowing that you have hit rock bottom can be a tough blow on a person’s pride. People who claim bankruptcy often feel like they have failed and feel a strong sense of guilt because they couldn’t pay back the money that they had agreed to pay. The embarrassment of admitting your failures to family and friends can be difficult to overcome.
- Filing for bankruptcy will affect your credit score for a long time. Canada’s largest credit bureau, Equifax, keeps the record of your bankruptcy on your file for 6 years after the date of discharge which is when you make your last payment. Not just 6 years after you filed for bankruptcy, but 6 years after your final payment. That is a long time to not have access to any credit. With a bankruptcy on your credit bureau report, most lenders will not even consider lending money to you. It is difficult to re-establish your credit rating after a bankruptcy.
- More and more employers are now checking credit reports before making their hiring decisions. Employers want to know that you can handle your own finances before giving you responsibility to handle theirs. Filing a bankruptcy may seem like the right thing to do now, but consider your current job and your future. If you lost your job and needed to find a new one, would you need to have a clear record and a good credit score? It is important to think of all of these scenarios before making such an important life decision.
- You could lose some of your assets. Some of your assets may be protected, but not all of them are exempt in a bankruptcy. If you have assets that are not protected, you will have to surrender them to be sold and the funds from the sale will be distributed among your creditors. Depending on your situation you may have to give up certain assets that you may have been able to keep had you used another form of debt help.
Sometimes it seems as though bankruptcy is your only option. If you feel this way, know that there may be other options available to you such as filing a consumer proposal. If you would like to learn more about bankruptcy or restructuring your debt through a consumer proposal, give 4 Pillars Lethbridge a call at 403-332-7361. We offer a free one hour consultation where we go over your situation, answer your questions and provide you with your options. At 4 Pillars Lethbridge we work for you, not your creditor so we have your best interest in mind.
