If you find yourself overwhelmed by your debts (and perhaps even fending off calls from creditors and their collection agencies), you may think bankruptcy is your only hope of getting out of financial difficulty. In reality, however, bankruptcy should always be your last resort—and you may have other alternatives before that.
Sadly, many people simply aren’t taught adequate money management skills—particularly when it comes to handling debt. A skilled financial counsellor can take an objective look at your financial situation, and if appropriate, help you to set up a budget that will allow you to pay down your debt load while improving your credit rating at the same time. A credit counsellor may also be able to arrange a debt management program with your creditors, allowing you to make smaller, more manageable payments (see our caution about debt management programs here).
If you carry a number of small debts (credit cards, personal loans, etc.), it may be that you are paying so much interest that you’re unable to make a dent in the principal amounts. If this is the case, it may be possible to arrange a consolidation loan, which will pay off all the smaller amounts and leave you with a single payment instead of several.
A consumer proposal is an agreement under which you pay your unsecured creditors a portion of what you owe them, based on your financial situation. There are no further interest charges, and once the proposal is accepted by your creditors, it is binding on them (they can’t change their minds). The agreement generally lasts up to five years and must be done through a licensed bankruptcy trustee.
Before you decide that bankruptcy is your only option, make sure you explore the alternatives. With the right help and your own determination, you may be able to avoid bankruptcy altogether—and create a healthy financial future for yourself and your family.
For more information or to find out which option might be best for you, call now for your free, no obligation consultation: in Ottawa call 613-237-5555; out of town, call toll-free 1-800-517-9926 or book online.