Business Bankruptcy in Canada is primarily governed by the Bankruptcy and Insolvency Act (BIA), a…
Debt Consolidation vs Bankruptcy: Which is Better?
Are you weighing the pros and cons of debt consolidation vs bankruptcy in Ontario? wondering which is better?
Maybe it’s time to take a closer look at the options.
What is Debt Consolidation?
Debt consolidation is when you take out a new loan to pay off old debts.
So you’d have one monthly payment instead of several. That’s the plus side. Ideally, you’d also have a lower interest rate. Win-win, right?
Absolutely. That’s provided your credit cards aren’t already maxed out and you’re missing payments or paying late. In that case, you’d have a tough time qualifying for a loan.
Now, remember: debt consolidation does not reduce your debt. You’ll pay less interest, but you must still repay your debt in full.
You may get the best rate with a secured loan, meaning the loan is tied to your house or some other asset. This could work, but it may not be the best idea if your budget is still strained.
Debt consolidation makes the most sense if you can lower your interest rate and comfortably make larger payments to reduce your debt more quickly.
So, debt consolidation vs bankruptcy…which is better?
What is Bankruptcy?
Bankruptcy can reduce or eliminate your debt, allowing you to make a fresh start. It is a legal process that only a Licensed Insolvency Trustee can perform.
Bankruptcy can stop creditors from calling, and halt mounting interest charges.
Even better, it can reduce or eliminate your debt. You will likely keep your house and car. And it should leave you in a much better financial position.
Of course, some debt will remain your responsibility, like child support and student loans. But with stronger financial footing, you should be able to easily handle these obligations.
Is Bankruptcy Right for Me?
Bankruptcy certainly isn’t for everybody. But…
If you are overwhelmed with monthly bills…if you simply cannot make ends meet…if you are sick and tired of the burden of debt, then bankruptcy could be an option.
Bankruptcy is an option when you have exhausted other possibilities. You’ll have the opportunity to reexamine your budget, end your reliance on credit cards, and rediscover your peace-of-mind.
It’s a perfectly viable option.
Will I Ever Have Good Credit Again?
If you’re concerned about your credit score, consider this:
With debt consolidation, you make your one payment on time each month. So you can start repairing your credit score right away.
Bankruptcy, however, will require a bit more effort. Although bankruptcy can remain on your credit report for at least six years, that doesn’t prevent you from rebuilding your credit score much earlier.
Get Help with Debt
If your debt has gotten out of hand, bankruptcy and debt consolidation are not the only options. Don’t you owe yourself a way out?
Commit to a fresh start. A Licensed Insolvency Trustee can provide all of the information you need to make a smart decision. Contact Adamson & Associates today at 519.310.JOHN