You may not need bankruptcy. Credit counselling may be a better option for you. There are fees associated with bankruptcy which is around $1,500-1,800 in 2019. So then, how much does credit counseling cost? Credit counselling doesn’t cost anything. What does credit counseling do? Credit counselling helps you see what your debt relief options are. It is definitely worth it to explore all of your options before making a serious decision that could affect the rest of your life, like bankruptcy.
Do I need to Declare Bankruptcy? What are My Other Options?
Bankruptcy can severely impact your future financial goals, and so it shouldn't be taken lightly. We understand how debt can add up and get out of control. We also understand most people immediately think they need to declare bankruptcy. That isn’t the case though and everyone’s situation is unique. We are one of Canada’s leading credit counselling agencies and are here to help. Let us explain why bankruptcy is actually the last thing you should try.
Bankruptcy Should be the Last Resort - Seek Credit Counselling to Stop Collection Calls and Garnishments
Many of us run into life situations that can make managing our debt much less, well, manageable, and when that happens things can get a little scary very quickly. You might start to get collection calls, you may be threatened to be taken to court or your wage might be garnished - yikes! Most people might think their only option is bankruptcy, but credit counselling provides an alternative. So, what does credit counselling do?
Credit Counselling Helps Clear Debts. Bankruptcy, Credit Counselling - Which is Best?
Consumer credit counselling will help uncover many different options that are available for you to try to clear your debts. Credit counselling means paying back all of your debts, but this is done in private, so very few people will know. It is of course your choice to disclose this information to others or not. There is no permanent record, or public record like there is with bankruptcy. Bankruptcy should always be your last choice, but many think it is their only one.
Bankruptcy helps clear debts faster, but it has many long-term implications that will affect you for the rest of your life. Also, not everyone can go bankrupt. Sometimes a certain requirement of bankruptcy is not met and you will have to look into other options. There are times however, when bankruptcy is necessary.
When to Choose Bankruptcy and Why it Should be Avoided if Possible
If the cost of bankruptcy, assets lost and financial future implications make it easier for your debts to be resolved then this could be the best option. Declaring bankruptcy will stop collection activities, all of your creditors will be notified and wage garnishments and lawsuits will be halted. This may sound great. However, after you review your options with a Credit Counsellor and decided declaring bankruptcy is the best option, there are some factors to consider. For example:
- You must live in Canada, or do business or own property in Canada.
- You must also have at least $1000 in unsecured debt, have no way to pay it back and have very few assets (or sell them).
- Once you obtain a bankruptcy discharge certificate, your debts will be cleared.
- You will have a searchable, permanent record filed on the Superintendent of Bankruptcy website.
- Going bankrupt can also create issues with loans, credit, financing, housing and many other things that can limit the things you can do in life.
Avoid bankruptcy if you can. This should always be your last resort, when no other options will work for you. You can know what your other options are if you get help from a credit counselling agency.
When to Choose Credit Counselling Instead of Bankruptcy to Help You Get Out of Debt
If you think bankruptcy is your only option, then you need to contact a credit counselling agency for help.
Most reputable credit counselling agencies are non-profit organizations. There are no restrictions to speaking with a Credit Counsellor from these agencies. At Credit Canada, all of our appointments are free, confidential and non-judgmental. You can clear your debts you have held by Canadian creditors without declaring bankruptcy.
With a Credit Counsellor, the process is private. It’s between you, your Counsellor, your creditors and no one else. The credit counselling process isn’t intimidating and will put you at ease. The first place a Credit Counsellor will usually start is with a monthly budget.
Build a Monthly Budget to Prepare for Your Free Financial Assessment
Building a monthly budget includes going over your net income, debt and monthly expenses, as well as any assets you might have. Your Counsellor will review your income, expenses spending habits and assets. Reviewing these things will help paint a picture of the work that needs to be done. This will be revealed as part of your financial assessment.
Financial Assessment and Getting Your Debt Related Questions Answered
Once your monthly budget is complete, you will receive a full financial assessment. During this time you can ask different debt related questions, like what is the difference between credit counselling vs debt settlement? Your Counsellor will also present the best debt relief plans that suit your situation. They will also let you know which don’t make sense for your situation and which should be avoided.
Possible Debt Relief Plans and Which Should be Avoided
There are many different debt relief options and everyone’s state of financial affairs is unique. Each option needs to be carefully explored. This is not a one size fits all scenario. Let’s take a look at what the most common debt relief options are:
- Debt Consolidation Program / Debt Management Program (DMP)
- Credit Counselling vs Debt Settlement
- Consumer Proposal or Bankruptcy
- Other Debt Consolidation options
- Handle your debts on your own
Pros and Cons of Consumer Credit Counselling - Why Non-Profit is the Way to Go
There are many pros and cons of consumer credit counselling services that are for-profit companies. However, with an accredited, non-profit credit counselling agency these are next to none. Non-profit agencies will usually have a high success rate and many creditors will work with them in order to help you resolve your debts. We shall look into the difference between for-profit and non-profit agencies now.
For-Profit Companies vs Non-Profit Agencies - Is there a Difference?
With for-profit credit counselling companies, the programs they offer are not free. Quite often people pay into these programs, only to find no creditors will work with the company they chose. In turn, this means that they spent more money they did not have and are in an even worse position than before they sought help. Since nobody wants to be in even worse predicament, finding a reputable non-profit agency is the way to go.
Bankruptcy, Credit Counselling - What Do You Choose?
With a non-profit credit counselling agency like Credit Canada our service is free and confidential. We are reputable and have many glowing credit counselling reviews from our happy clients. We are Canada’s longest serving credit counselling agency and have helped thousands of Canadians just like you.
It is possible to go through a service like debt consolidation without bankruptcy. Bankruptcy, of course, has the biggest impact on your life as well as your short and long-term financial goals. It can be confusing trying to figure out how to get out of debt. Bankruptcy? Credit counselling? Remember, bankruptcy should always be your last option. We can be reached by phone at 1.800.267.2272 for a free, no obligation conversation. We are here to help and there is hope. You can be debt free.