Bankruptcy Isn’t the Only Option: Debt Relief and Other Alternatives
People faced with extremely large debts often turn to bankruptcy as a solution, thinking that it’s the best way to get rid of creditors and start fresh. Bankruptcy however, should only be used as a last resort. Canadians are highly encouraged to first negotiate their debts and seek alternate debt relief methods before turning to bankruptcy.
In many ways, bankruptcy isn’t exactly an easy way out of one’s financial woes. A declaration of bankruptcy stays on your credit bureau report for over 6 years, and until that expires, it will be extremely hard for you to obtain any credit. Furthermore, not all debts will be written off—secured debts like mortgages, car loans and student loans that are not 7 years old are excluded from bankruptcy, and so you still need to find a way to pay for these if you have them.
One debt management method that you can try is debt relief like those offered by firms like 4 Pillars Debt Consolidation & Credit Rebuilding for Victoria, BC in Canada. These firms are able to help you manage your debts better by coming up with a consumer proposal that fits your paying capabilities. Such companies can help you reduce your debt amount by as much as 80%--that’s a hefty load to be eased off your shoulders if the proposal proves successful.
If you live in Alberta, Nova Scotia, and Saskatchewan you also have the option of an orderly payment of debt wherein you can pay for your debts over a longer period of time and a fixed rate of interest. This however must first be agreed by the creditors and approved by the courts.
You can try to phone your creditors to arrange a lower interest rate for you, but make sure that you have a good payment history prior to your debt, in order for them to at least consider your proposal. That said, be prepared to be turned down if you plan to face and negotiate with your creditors yourself. Most creditors will only consider such proposals when backed up by trusted debt relief firms, so it might be best to seek professional help from the start.
8 myths of bankruptcy, CBC.ca
What happens when you declare bankruptcy?, Canadian Living