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How To Avoid Bankruptcy While Reducing Debt

Even though residents of Cubec have lower average debt than their counterparts in other provinces, debt imposes similar stress on them. Bankruptcy is an effective method of managing debt, but there are other alternatives that are worth exploring. How can you alleviate your debts while avoiding bankruptcy?

The simple answer is to be quick to ask for help when debt problems arise. If you are able to make your minimum payments, but are struggling to reduce your debt, there are different options available to you. In order to find ways to alleviate your debts, one of the first steps to follow is to take the time to increase your knowledge of the various debt solutions. If you understand the debt relief options well, you will be able to make more informed decisions and determine whether you are able to fix your debt problems on your own or whether it is time to ask for help. a professional.

Here is an overview of debt solutions other than bankruptcy:

 

Debt consolidation

Debt consolidation

Consolidating multiple debts into one reduces the number of payments to be made each month. The debt consolidation loan should make it possible to obtain a lower interest rate than that of the credit cards and thus to reduce the monthly payments. A fixed date for the full repayment of your loan will also be established, which is not the case with revolving credit, for example credit cards. Debt consolidation can be a good option for those who pay their bills on time, but are struggling to lower their debt threshold. You can discuss the issue of debt consolidation loan with your bank or a financial lender.

 

Credit counseling

Credit counseling

By using a credit counseling agency, you can reach an agreement with your creditors to reduce interest rates or even freeze them for a period of time. This can help you pay off your debts faster. The other component of credit counseling is financial education. You can take part in courses that will teach you the techniques of effective debt and finance management. These courses can prove to be very beneficial since by increasing your financial knowledge, it will be easier for you to make informed financial decisions in the future.

 

Consumer proposal

Consumer proposal

The consumer proposal is the main alternative to bankruptcy. This is a legal agreement between your creditors and you that establishes a plan for repaying your debts and must be concluded with the help of an authorized insolvency trustee. You will often only have to repay part of your debts and will have an extended period of up to five years for repayment. The proposal will also involve other obligations, such as participating in two credit orientation sessions. By submitting a consumer proposal, you will obtain an R7 credit score which will be visible in your credit report for three years after the full execution of your consumer proposal; however, you can already start to restore your credit during this period.

 

Bankruptcy

This last option of debt relief is generally used when all the other solutions are not enough to correct your debt problems. You may have to give up some of your assets and make overpayments to pay off your debts, but all of your unsecured debts, including credit cards, personal loans, payday loans, lines of credit, and tax debts will be eliminated. . A licensed insolvency trustee will be able to answer your questions regarding the bankruptcy process.

Now that you have an overview of all the debt solutions available to you, the best way to avoid bankruptcy is to meet with a licensed insolvency trustee to discuss them. Whether you choose to prioritize the repayment of your debts by means of a debt consolidation loan or ask the assistance of an authorized insolvency trustee to file a consumer proposal, you have several options to avoid bankruptcy and paying off your debts.