Useful Alternatives to Avid Bankruptcy in Canada
Wondering whether or not to file bankruptcy? It is incredibly hard to have to deal with unmanageable debts at any particular time in any one’s life. But is filing for bankruptcy the right way to go? Well, it is not if the following ways of avoiding bankruptcy can be followed. Of equal essence are the alternatives to bankruptcy and this post seeks to discuss them in depth.
Simple Ways to Avoid Bankruptcy
1. Borrowing from family members and friends However hard it might appear, it is a good way to avoid bankruptcy. All that is required is a budget. As soon as one realizes that they are at the verge of getting into bankruptcy, a budget is drawn covering how much is needed to avoid getting into bankruptcy and how much the debtor can raise. This can then be presented to a friend – parents or siblings. However, money can really spoil good relationships and therefore the need for trust and a true promise of quick repayment back to your family.
2. Property sell If a bankruptcy is filed on the chapter 7. A Licensed Insolvency Trustee reviews the debtor’s property and decides if it should be put up for sale or should just be liquidated to pay off the debts. Before going into debt, the debtors can just sale some of the property. To settle debts, it is wise to check what is not a necessity really and just sell it off which is far better than surrendering all property to by filing for bankruptcy. The money generated from this can then be used to pay some debts.
3. Restructuring the mortgage. This basically means arranging a new mortgage payment plan. It leaves with you some money that can be used to pay debtors. It is a better method than having your house locked or even getting into bankruptcy. This can be done through the following ways:
- Negotiating the idea of re-configuring the mortgage with the house lender under an all-new payment plan.
- Refinancing the mortgage, entails applying for lower interest rate loans that a payable for a longer period of time. Money saved can then be used to pay off some debts.
4. Cut back on expenses and sacrifice. Assessing one’s budget a new could be all that is required to avoid getting into bankruptcy. Cut out on the not so important expenses as well as unnecessary treats. This includes: going for movies, eating out, going on vacations, etc. This will save some extra cash that can help settle off some debts. Any unnecessary expenses are being cut off; a financial adviser comes in handy to assist with the management of credit cards. Differentiation of needs and wants is equally important at this point.
Having looked at the ways to avoid bankruptcy, it is time to understand the:
Alternatives to bankruptcy
1. Debt settlement It is also known as a debt reduction. This option is legal and applies in cases where one cannot keep up with the minimal debt payment.it entails an agreement with one’s creditors where the amount of money owed to them is cut to a percentage of about forty to sixty. This can be done through negotiations with debt collection agencies and creditors in order to reduce the amount of debt.
2. Debt management. This is where the services of a firm dealing with debt management or a credit counselling agency are sought. They help in reduction of penalties as well as interests. To achieve proper management, the monthly payment which is supposed to be paid to the creditor is remitted to the agency. A debtor’s discipline then applies as they are required to be in control of their bills in order to free themselves from debt. This works within a shorter predictable period of time.
3. Do It Yourself. This involves the debtor trying to sort the debt issue all by themselves without involving professionals. For this to work, two things have to be put in place. -Negotiating with creditors. This helps one to come up with a payment plan that is manageable to them. -Come up with a plan the plan is on how daily bills will be sorted and as the debt payment process stays on course.
4. Debt consolidation program It is also known as a bill consolidation program. This program works best in the following scenarios: -If the debtor has a reliable income-Still has good credit
All bills are consolidated to a single monthly payment. This is achievable by taking a loan that has less interest rate to pay off the debts.
5. Consumer Proposal. Only a Licensed Insolvency Trustee can file a Consumer Proposal. We talk to Menderani Inc and they explained that most individuals will prefer using this instrument since it will allow them to keep their cars, homes and other important assets.
5. Pay day loan consolidation. This basically works by consolidating and replacing a number of pay day loans into a monthly payment that is affordable. It is a perfect idea for someone struggling with payday loans. Before settling for bankruptcy filament, all avenues for prevention of the same as well as the alternatives should be exhausted. Let this be the last resort, probably when someone has hit a dead end. Bankruptcy can be avoided.