“I’m going bankrupt.” Red Deer residents and indeed Canadians from coast to coast break out in a cold sweat at the mere mention of the possibility. You need to know going bankrupt is not the only way to deal with crushing debt. There are alternatives.
All debt solution alternatives – even personal bankruptcy – begin at the same point – an accurate assessment of your financial condition. You are going to get out of debt either on your own or through working with your creditors to make alternative arrangements for paying them back all or part of what you owe. To determine how to proceed you need to know where you are right now.
You need to create a financial “net worth” statement for yourself. You need to list all that you owe, all that you own, and your sources of income. While that is something you can do on your own, there is no reason for you not to seek professional help. The vast majority of debt solution professionals – including credit counselors, debt solution companies, and licensed bankruptcy trustees – offer free initial consultations. The first thing they will do for you is document your current financial circumstances.
Debt solutions are based on that initial assessment. If your total debt is moderate and your income is stable you may be able to take out a debt consolidation loan using collateral like the equity in your home.
In some cases, reworking or establishing personal budgets can generate enough additional disposable income to get back on track with your debt repayments. Personal budgeting involves strict expense controls and if you are already behind on some unsecured debt payments you may have to contact some of your creditors, explain your situation, and propose a gradual repayment plan. If you start early enough in the game, creditors are more willing to listen to your proposal than you might think.
If your total debt is beyond your ability to stay current even with a loan or budget and cost controls you will need a debt repayment plan from a professional debt consultant. You have several options.
Shop around for a reputable credit counselor or debt solution company in Red Deer. Only meet with people who can provide real references and who have been in business for a long time. They offer two alternatives to going bankrupt Red Deer residents can consider.
For people with low to moderate levels of total debt they have debt management plans. The professional determines a monthly payment you can realistically make for a maximum of 3 years. If that total amount is enough to repay all that you owe with a little help from your creditors through reduced interest rates, the professional will contact your creditors and propose this alternative repayment plan.
For people with debt levels too high to be fully repaid in 3 years there are debt settlement plans. The idea is the same – you make a single monthly payment direct to the counselor or debt solution company. With this plan, the professional must negotiate a reduction in the total you owe to match the amount of your monthly payments over 5 years, less their fees and commissions. With both management and settlement plans make sure you fully understand how much you will be paying in fees and commissions to the debt solution provider.
There is one final alternative to going bankrupt Red Deer residents need to know. It is called a consumer proposal and is available only through a licensed Red Deer bankruptcy trustee. The terms are very similar to the debt settlement plan where you repay less than the total you currently owe. However, consumer proposals come with legal protection against creditor collection activity. If your creditors have already garnished your wages, a consumer proposal is the only debt repayment plan that will stop the garnishment.
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