First off, before you dive into this post, you should know that bankruptcy is not as bad as it sounds. Like any debt solution, it has its pros and cons, and it is not the end of the world when you file for it. That being said, bankruptcy is a last resort option. Between bankruptcy and paying your debts, you still have a few options – which you may not be aware of.
Here’s a quick list of them.
Sell your Personal Assets
This may not on the top of your list, but selling your personal assets is a way to get rid of your debt. If you file for bankruptcy, you lose control of your assets. Most of your assets will be taken while only those that are considered as necessities will remain. However, by selling your own assets instead of filing for bankruptcy, you maintain a level of control on which ones to sell and at what price. By using the bulk money earned from your assets sale, you can, if not get rid of, reduce your debt significantly.
You can have a meeting with your creditor and present a repayment proposal. If agreeable, you will be in a better situation. However, your repayment proposal needs to be agreeable to the creditor. You will have a tough time negotiating the interest rate and time period.
Consolidating your debt is a fantastic way to deal with your debt. When you have multiple debt accounts, you pay off all your debts from one account. Now you will have a single debt account. It’s preferable to pay the debt with the account that has the least interest rate. Furthermore, having one debt account makes it easier to manage.
The Bankruptcy and Insolvency Act allows you to send a formal proposal to your unsecured creditors. It’s quite different from a repayment proposal. When you file for a Consumer Proposal, you will be supported by a trustee. A trustee will understand your financial situation and propose various options for you. Once you file a Consumer Proposal, you stop making payments to your unsecured creditors. Your creditors will have 45 days to accept or reject the proposal. They can have a meeting over it, where the trustee will represent you. If they don’t reply, it is assumed that the proposal is accepted.
How do you decide which option is best for you? The best answer is that it all depends on your situation. Fix an appointment with 4 Pillars and a professional will be able to thoroughly look at your financial and debt situation, understand your future plans and then make the best recommendation for you.