Do you need help getting out of debt?
One in six people are estimated to have serious financial difficulties which causes worry and stress in their lives. Many people inadvertently find themselves in crippling debt due to a disability, illness, job loss, business failure or divorce.
Many people believe that when their debt gets out of control, they need to file for bankruptcy but this is simply not true. A bankruptcy trustees, we’re able to provide you with other solutions for your debt problems, like debt consolidation or credit counselling.
Aside from filing for bankruptcy, there are many other options for you to control your debt.
A debt consolidation loan combines all of your outstanding debts into one single payment. This payment will satisfy multiple creditors and can be obtained by a financial institution. Debt consolidation loans are given based on numerous factors like income, job stability, debt level and credit rating.
Informal debt settlement
An informal debt settlement is something that you negotiate with a creditor and outlines how you will pay back your debts. Creditors will negotiate this with you and you will need to submit and comply with an honest and realistic plan for how you’ll pay back your debt.
Credit counselling is a great option if your debts are relatively low but still difficult for you to pay back. As bankruptcy trustees, we have a lot of experience with credit counselling and can contact creditors on your behalf to help you manage the situation.
Consumer proposals often will lower the amount of debt you need to pay back to your creditors by offering a lower repayment amount and prevent further interest from accumulating. This option can help you avoid filing for bankruptcy by working with your specific situation and finances.
Orderly payment of debt (OPD)
This is also referred to as a Consolidation Order and is an order from the court. This means that the court will consolidate your loans so that you can pay an administrator who pays your unsecured creditors on your behalf at an interest rate of 5% per annum within four years. This four year term can be extended but can actually damage your credit rating more than filing for bankruptcy. An OPD is often preferable because it protects you from garnishments and lets you keep certain assets like your home or car. This option is only offered by government-approved institutions and isn’t available in every province. Ontario is one of the provinces where this option is not available.
If there are no other solutions and you can’t pay your creditors back, filing for bankruptcy will give you immediate protection from your creditors. You will have a fresh start once you’re discharged from bankruptcy.
Filing for bankruptcy isn’t a decision to be taken lightly so please consult with a bankruptcy trustee to learn more about the process and how you can manage your debt. Contact us today for more information about credit counselling and debt consolidation.