For most homeowners, bankruptcy is a terrifying word. Becoming bankrupt is a legal process that eliminates debt, in return for the surrender of all your assets and the completion of certain duties. The unfortunate reality is that nearly 126,000 Canadians will file for bankruptcy each year. The good news is that filing for bankruptcy isn’t your only option. In this week’s article, we are going to go over 4 alternatives that could help you absolve your debts and sort out your finances without going bankrupt.
Taking out a debt consolidation loan can be a helpful way to repay higher interest debts. The key is to borrow at as low of an interest rate as possible. This makes it so that you are able to pay back the loan in a timely manner without being overcome with added interest. Homeowners can tap into programs such as mortgage refinancing and CRA debt relief services for this purpose.
Older debts aren’t worth as much to creditors, so in some cases, you can agree to pay a lump sum of less than your total amount owed. Often this can be anywhere between 20% and 50%. This is a great option in cases where you have suddenly come into a large chunk of money, like a bonus from work. Keep in mind, however, that your credit will still take a huge hit.
For those struggling for answers and overwhelmed with bank loans and credit card debt, it can be the right solution just to ask for help. Not-for-profit credit counsellors are trained to come up with achievable debt management plans for their clients. These plans often require the debt to be paid in full, but at little or no interest.
This last option is for those battling more debt than they can reasonably repay. This legal process involves working with a Licensed Insolvency Trustee to build a proposal that will be presented to your creditors. This proposal is an offer that includes how long you intend to take to pay back the debt, or if you are suggesting a debt settlement. Payments are made through the trustee.
Facing financial uncertainty and overwhelming debt is a struggle that many Canadians face. Luckily, they don’t have to do it alone. If you own your own home and are considering bankruptcy, contact the experts at Source Mortgage today and ask about our refinancing and debt consolidation products. Let’s help you make a plan to get back in control of your life.
Source was absolutely great to work with - went above and beyond to help us get everything done when buying our new home. Highly recommended!! Chad and Jenelle Richards Jan 09 2013
Chad and Jenelle Richards
Added January 23rd 2013
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