Almost everyone has some access to credit at some point in their lives. But once you've used it up, what's your plan for making the debt go away as quickly as possible?
Learn HowIn our modern world, almost everyone has some access to credit in it's multiple forms - from credit cards and personal loans to overdrafts, installment plans and much more. Getting rid of that debt, sometimes can be a big problem.
When debt gets out of hand and there's no plan to resolve it, that debt becomes problem debt. A lot of people in this situation automatically assume they have to file for bankruptcy. In reality, you might have more options than you
First, you’ll need to make a list of which
Your credit is probably still "good" if you're making payments on time. If your credit is good then one option to look at is refinancing through a consolidation loan. A consolidation loan brings all your debts together under a single loan (with its own interest rate) and monthly payment. If you have multiple credit accounts, it may make your budgeting easier to have just one payment to manage.
Refinancing is sometimes the answer, but the following two considerations are very important:
If you are already behind with payments to one or more creditors, it is likely that your credit is now “bruised.” In this situation, you need to understand that the only way to avoid the “bad credit” label is to get current and stay current on your payments.
If you’re
Reduces or eliminates interest.
Partial debt repayment
Federal court procedure
Here are a few options to look into before heading towards that dreaded last resort.
If you are able to pay off your debt entirely, but with the interest reduced or eliminated, then one option is
At the end of a Debt Consolidation Program, all your debts will have been paid in full.
If you have the ability to pay a portion of your total debts, a Consumer Proposal is your next option. This is a legal proceeding under the Bankruptcy and Insolvency
This percentage is what is proposed to your creditors in a Consumer Proposal. It is the trustee, and not you, who decides how much of the debt is payable based on your assets and income. Some people think that they can choose the number, but this isn’t true.
Creditors have the right to reject the proposal if they feel it isn’t enough, but most of the time, they are willing to accept the portion of the money they are going to get back.
For those who just don’t have any other options, there is bankruptcy. This is handled by a Bankruptcy trustee. If a debtor is able to file a Consumer Proposal, the trustee should encourage them to do so because filing for bankruptcy will be more complicated and it will have more of an impact on the debtor's future.
For some debtors, there is no other option, which is why bankruptcy is often referred to as the solution of last resort.
If you have ever filed a bankruptcy in the past and you need to file again, the second time through it is likely you will be treated more harshly and it will be extremely difficult to re-establish credit.
Bottom line? Bankruptcy should be seen as a once-a-lifetime option, to be used only when there are no other available options. Bankruptcy is not the only avenue for dealing with problem debt.
It's easy! Just fill out the form below and one of our credit counselling experts will contact you to begin discussing your personalized debt management options.