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Bankruptcy, Credit Counselling - How to Choose the Right Option

by:
Gursh Singh

You may not need bankruptcy. Credit counselling may be a better option for you. Credit counselling doesn’t cost anything, it helps you see what your options are and it is definitely worth it to explore before making a serious decision that could affect the rest of your life. Bankruptcy is one of those things and should not be taken lightly. We understand how debt can add up and get out of control. We are here to help.

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. Here’s how.

I Need Help with my Debt. Bankruptcy, Credit Counselling - Which is Right for Me?

This is a question that cannot be easily answered, because every situation is different. Bankruptcy helps clear debts faster, but it has many long-term implications that will affect you for the rest of your life. 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. With credit counselling, you will be able to see all of the different options you have. Bankruptcy should always be your last choice, but many think it is their only one. Also, not everyone can go bankrupt. Sometimes a certain requirement of bankruptcy is not met and you will have to look into other options.

When to Choose Bankruptcy and Why it Should be Avoided if Possible

There are many factors when choosing to declare bankruptcy. 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. Filing for bankruptcy will stop collection activities, all of your creditors will be notified, and wage garnishments and lawsuits will be halted. Bankruptcy is not free; there are fees when filing for bankruptcy.

Once your bankruptcy has been discharged, your debts will be cleared but 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.

When to Choose Credit Counselling to Help You Get Out of Debt

The hardest part of Credit Counselling is deciding to pick up the phone.

Most reputable credit counselling agencies are non-profit organizations. There are no restrictions to speaking with a Credit Counsellor from these agencies. It’s free, confidential and non-judgmental. You can clear your debts you have held by Canadian creditors. When you decide to speak to a certified Credit Counsellor, they will start by reviewing your financial situation with you first.

Build a Monthly Budget to Help You See Which Debt Relief Plan is Best for You

Building a monthly budget includes going over your net income, debt and monthly expenses, as well as any assets you might have. A budget is one of the best places to start. Getting back to the basics can really help paint a picture of the work that needs to be done.

Once a full financial assessment has been completed, you will be presented with the best debt relief plans that suit your situation. Getting credit counselling vs a debt settlement or bankruptcy can introduce new debt relief options to you that you may be unaware of. Here are the main options that your Credit Counsellor will go over with you that can help you get out of debt:

  • Debt Consolidation (without bankruptcy) (AKA Debt Management Program / DMP)

  • Debt Settlement (Settle your debts through our debt help programs)

  • Consumer Proposal

  • Bankruptcy

They might also show you how it’s possible to take care of your debts all on your own. The best part is, with a Credit Counsellor, the process is private. It’s between you and your creditors, and no one else.

Bankruptcy, Credit Counselling - What Do You Choose?

The best thing to do when deciding between filing for bankruptcy or credit counselling is to find out where you stand financially. A Credit Counsellor will go through your net income, monthly expenses and debts with you, and give you all your options for resolving your debt.

There are many pros and cons of consumer credit counselling services. The pros far outweigh the cons. A certified Credit Counsellor can walk you through the impact each option will have on your financial future. Bankruptcy, of course, has the biggest impact on your life and your short and long-term goals.

Our service is free and confidential. We are Credit Canada and we are Canada’s longest serving, best non-profit Credit Counselling agency. Our credit counselling reviews speak for themselves. We have helped thousands of Canadians just like you. Bankruptcy, credit counselling, debt consolidation... it can be confusing trying to figure out what to do. Call us 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.

Topics: Bankruptcy, Credit Counselling

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