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Alternatives to Bankruptcy
When it comes to relieving significant debts, declaring bankruptcy is perhaps the first thing that comes to mind. However, there are a number of alternatives to bankruptcy to resolve your debt such as a consumer proposal, debt consolidation, credit counselling and informal debt settlements. If you're wondering how to avoid filing for bankruptcy, here are the best alternatives for avoiding bankruptcy.
Alternative #1: Consumer Proposal
If you feel that potentially losing assets such as your car or house is too distressing, a consumer proposal may work for you. A consumer proposal is a formal agreement between you and your creditors that outlines how you will settle your unsecured debt.
A consumer proposal allows you to make fixed monthly payments you can afford, as determined by your income and what you own. Review the process with a Licensed Insolvency Trustee, file a proposal, fulfill the agreement between you and your creditors, and you can make steady progress towards becoming debt free. Learn how the consumer proposal process works.
Alternative #2: Debt Consolidation
If you're struggling to keep track of multiple debts at varying interest rates, you may want to consider taking out a loan to consolidate your debts into one monthly payment, typically at a reduced interest rate.
You may be a good candidate for a debt consolidation loan if you have a decent credit score and your monthly budget allows you to make the monthly consolidation loan payment. Keep in mind that a co-signer may be required to guarantee your loan.
Alternative #3: Informal Debt Settlement
An informal debt settlement is a voluntary arrangement negotiated between you and your creditors on the terms of the debt you owe. You will need to call each of your creditors directly and try to negotiate interest rates, amounts and payment schedules.
To learn more about the advantages and disadvantages of an informal debt settlement, or to discuss other debt relief solutions, talk to your local Licensed Insolvency Trustee. You will want to consider factors like timelines to pay, interest rates, and total debt owed to help you make the most educated decision.
Choosing the Right Debt Solution
Whatever your debt situation may be, we can help you find a solution. The knowledgeable professionals at your local MNP LTD office can walk you through your options, so you can determine the best path to take.
There are many alternatives to bankruptcy. Discover the right plan for you: schedule a free, confidential consultation with us today.