Before You File For Bankruptcy
Bankruptcy is a place where nobody wants to be. First of all it means that you have had such financial hardship and distress that you are now completely broke. Secondly you will have a record that will hang around for a long time making it difficult to take out a mortgage or buy anything on credit. Even though your credit rating can be built up again, you will never be able to completely delete your record of bankruptcy. If you are on the road to bankruptcy, know that there could be other options available to you. Here are a few options for you to consider before filing for bankruptcy.
Consolidation Loans
A consolidation loan may be a good option for you if you have many high interest debts such as credit cards or pay day loans. You can take out one big consolidation loan from your bank and that loan will pay off your smaller debts, usually at a reduced interest rate. This way you will pay back all of the money you owe to your creditors and you will be able to make one simple payment each month. You must qualify for a consolidation loan however so if you have poor credit or a low income you may not be able to take out a loan.
Consumer Proposal
A consumer proposal is an alternative to bankruptcy in which you the debtor submits a proposal to their creditors to pay back a percentage of what is owed. When you file a consumer proposal interest stops accumulating, collection agencies and creditors can no longer contact you and most wage garnishments will cease immediately. Consumer proposals do less damage to your credit than a bankruptcy as you receive an R7 instead of an R9 on your credit report and it is easier to rebuild your credit after. In order to file a consumer proposal you must be insolvent which means that your debts are larger than your assets.
Sell off Assets
If you have any assets such as extra vehicles, holiday trailers, jewelry etc. that you are willing to part with, you can sell them and apply the proceeds to your debt. It may not take care of the debt completely or it may only be a drop in the bucket, but every little bit will help towards your goal of not filing for bankruptcy.
In some cases every option is exhausted and there is no other choice but to file for bankruptcy. If you have questions regarding bankruptcy, consolidation loans, or consumer proposals give us a call at 4 Pillars Red Deer 403-755-1757 and speak to one of our knowledgeable consultants. At 4 Pillars Red Deer we work for our clients not for the creditors so we always place priority on your best interest.
