You have a stack of credit card bills piling up. Your mortgage payment is due soon and you’re not sure where you’re going to get the money to pay it. You’ve recently faced a large financial emergency which has put an unexpected amount of strain on your finances. Living with debt is hard, and it can be even harder to talk about it. This is why for many people; their debt becomes so overwhelming they feel stuck with very few options to relieve their debt. Or so they believe.
When the day comes when you are face to face with your debt and you need to confront it, your lender may tell you that your only option is to file for bankruptcy. Bankruptcy is a legal proceeding involving a person or a business that is unable to pay its debts. When this happens, the consumer debts are either wiped out or repaid under the protection of the bankruptcy court. In many cases, the assets of the debtor are evaluated and can be used to pay off the debts that are owed.
Your lender or creditor may tell you this is your best and quickest option for debt relief. They may tell you it is your only option. But we’re here to tell you that this is wrong. You have options, and when it comes to debt relief, bankruptcy should be your last resort. We’re here to tell you why bankruptcy may not be the best option for you and how you can pay off your debt and rebuild your finances with alternative options.
Why you shouldn’t file for bankruptcy
In many ways, bankruptcy is considered to be one of the most severe forms of debt restructuring out there. It’s been said to give those struggling with debt a ‘fresh start’ on their finances. Depending on your financial situation, you may have to file for bankruptcy. But there are a lot of repercussions of declaring bankruptcy you need to be prepared for.
- You will lose some of your possessions: When declaring bankruptcy, a Licensed Insolvency Trustee will need to evaluate your assets to decide what to sell to pay towards your debt. This can be anything from liquid assets such as investments or savings you may have to physical assets like a car or in severe cases your house. Bankruptcy is an opportunity to start over. However, sometimes starting over can mean that year’s and year’s worth of investments will disappear.
- It can take a very long time to recover from: With the above being said, it can take many years to recover from bankruptcy. Bankruptcy stays on your financial record for a minimum of six years. This can make it extremely difficult to apply for loans (which may not be the worst thing). It can also take a very long time to rebuild your credit after as well.
- Not all your financial obligations are resolved through bankruptcy: Before you decide to file for bankruptcy, it’s good to evaluate what debt will be affected. There is a big misconception that bankruptcy will clear all your debts. This is untrue. Any secured debts will not be included in your bankruptcy claim. This includes student loans, mortgages, and car loans. Also, any alimony or child support debts can not be included in your claim.
- You still have to pay for bankruptcy: Ironically enough, before you even consider filing for bankruptcy, you have to ensure you have the funds necessary to afford it. When you file for bankruptcy, you will have to work with a trustee who will charge a fee for their services. This can be a big roadblock for those already facing financial hardships.
When you need to file for bankruptcy
Not to say that bankruptcy is the enemy, there are just easier and more efficient ways you can consolidate your debt without taking as big of a hit long term. Bankruptcy has given people the opportunity to restart their finances – which is a good thing. However, the only time you should consider filing for bankruptcy is when it is your only option left. If your debt has become extremely overwhelming and you’ve already looked at every other option, then it might be time to file for bankruptcy.
Work with us at 4 Pillars to consolidate your debt today and avoid bankruptcy! In our local 4 Pillars office, less than 1% of our clients file for bankruptcy. That is because we work hard for our clients and can show them which debt relief options work best for their financial situation. When it comes to resolving your issues with debt, you have more options aside from bankruptcy. There are options out there for you that have fewer repercussions and can save you more money in the long run. Work with us today at 4 Pillars and let us help you get out of debt as soon as possible! We work for you, and ONLY you. We don’t represent big banks and creditors; we fight for debtor’s rights. Before you make any major decision, give us a call at one of our three locations to book a free consultation! Yes, a FREE CONSULTATION! You can reach our Muskoka & Parry Sound office at 705-640-0187, our North Bay office at 705-980-0158, or our Sudbury office at 705-806-1252. At 4 Pillars, it’s our job to get you out of debt.