Battling debt and money troubles is exhausting and difficult. Many Canadians find themselves lost and confused when they are faced with financial problems. If you are overwhelmed by debt and you’re not sure what you can do about it, this can lead to high amounts of stress and negative emotions. However, it doesn’t have to be that way. There are options available to you that can help you get out from under your debt and put yourself on the path to rebuilding your financial life. One of these options is personal bankruptcy. However, this term is frightening for many people. Filing for bankruptcy might make you think that you are a failure or that your financial future will be ruined. This isn’t the case. Most people who file for personal bankruptcy are relieved. They are finally free of calls from creditors and collection agencies and they no longer have unpaid debts hanging over their heads. That said, bankruptcy isn’t the only option for getting out of debt. Avoiding personal bankruptcy is possible for many people. Here are a few solutions that could help you.
Watch out for Warning Signs to Avoid Personal Bankruptcy
There are a few warning signs that can tell you if you are heading towards financial trouble that could lead to filing for personal bankruptcy. These warning signs include:
- You’re only able to make minimum payments on credit cards and lines of credit
Paying only the minimum payment on a credit card can lead to it taking 20 or 30 years to pay off the full balance! If you can’t afford to pay more than the minimum, you could be heading towards financial trouble and possibly bankruptcy.
- You spend more than you make
If you can’t handle your monthly bills without borrowing money or using a line of credit or credit card, you’re on the path to financial trouble. These debts will soon catch up to you.
- You don’t have any savings or an emergency fund
Unexpected financial obligations can hit at any time. You may have to spend money to repair your car. Your basement might flood and you need to pay to get it cleaned and fixed. You could lose your job. If you don’t have any savings and one of these situations occurs, you’ll need to borrow money to handle it, which can result in future financial trouble.
- You’re missing payments
If you miss payments on bills, utilities and other expenses, it means you’re in some sort of financial difficulty. It won’t be too long until you’re in over your head.
If you’re concerned about your financial situation and avoiding personal bankruptcy, watch out for these warning signs. Finding yourself in any of the above situations means that you’re close to needing help to manage your debt.
Avoid Personal Bankruptcy with a Consumer Proposal
One option that many choose instead of bankruptcy is a consumer proposal. Like bankruptcy, this is a legal process that helps you find debt relief. In a consumer proposal, you make an offer to your creditors to pay them only a portion of what you owe on a monthly payment schedule. The amount you offer to pay your creditors is based on your specific situation and relates to your income, monthly expenses, assets and the number of dependents in your household.The rest of your debt is forgiven once all of your payments have been made. Many people choose this option as a way of getting out from under debt while avoiding personal bankruptcy. In a consumer proposal, you’re able to keep all of your assets. This is a major advantage of a consumer proposal over filing for bankruptcy. Plus, the note placed on your credit report after you file a consumer proposal only remains there for three years. In a personal bankruptcy, it lasts for at least six.
Talk to a Licensed Insolvency Trustee about Avoiding Personal Bankruptcy
If you are struggling with debt, worried about being able to pay your bills and unable to handle your financial obligations, you may want to speak with a trustee in bankruptcy. This is a person who is trained and licensed to help people who are having difficulties paying down debt. The trustee will review your situation and provide you with the options available to you, which may include ways of avoiding personal bankruptcy while still managing to find debt relief.