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What Kind of Bankruptcy Alternatives Are There?

Let’s assume that since you clicked this title that you have begun to think about personal bankruptcy. The good news is that there are alternatives to bankruptcy.

In this video we will explore all your options and advise you of some of the pitfalls out there.

Everyone’s debt situation is unique – the solution to your problem needs to be carefully assessed by a debt professional.

There are five main things you can do with your debt:

1. Do Nothing

We both know this doesn’t sound like a good idea but it is what many people do. The problem with putting off dealing with your debt, is, that your options may diminish as the problem deepens. So, the lesson here is – if you know the situation is getting worse – the sooner you talk to someone the more flexibility you will have in terms of choices that can be made.

2. Take a Second or Third Mortgage to Pay the Other Debts Off

An example of this strategy may include taking a reverse mortgage on your own home. This has become very popular over the last few years. With the real estate market roaring, it is tempting to use the equity in your home in this way. However, new mortgage rules make it more difficult to access your equity making this option less viable than it once was and ultimately leaves you with more debts after interest costs are added.

3. Debt Consolidation Loans & Services

This is really the same as #2 but involves hiring a debt consolidation professional who arranges everything. However there is a catch, actually a couple. These services frequently charge hefty up-front fees and the interest rates change on consolidation loans can be very high. This of course adds to your debt problem. There is no benefit to consolidating 19 percent interest rate credit cards at 29 percent.  These services are often offered by Finance Companies and often make their financial situation worse by consolidating at higher rates, or converting unsecured debt into secured debt, or involving co-signers to obtain such loans.

4. Credit Counselling

This alternative presupposes you are able to repay the full amount you owe – that counselling will help you manage your money better and all will be well.

The problem here is that you may not be able to repay the total amount owing and no amount of counselling will change that. Many people embark on the credit counselling track only to discover that the problem isn’t solved and they’re back to square one.

5. Consumer Proposal

A Consumer Proposal can significantly reduce your debt load and provides legal protection from creditors. It does not affect your credit rating as much as a bankruptcy would.  It is the number one alternative to bankruptcy and is an option well worth considering.

If you are still wondering what to do, why not talk to someone?  We would suggest, someone who is familiar with and can provide you the widest range of potential solutions. This will enable you to avoid the biases of ‘single-solution’ services.

Licensed Insolvency Trustees are the only debt professionals that can offer you the full spectrum of debt solutions. In fact they are the most highly trained debt professionals in Canada. So it makes sense to begin your research there.

Adamson & Associates Inc. offer free, no-obligation consultations and you can contact someone to-day.

John Adamson, Licensed Insolvency Trustee Ontario

John Adamson, CPA, CMA

John is a Licensed Insolvency Trustee (1994), a Chartered Insolvency and Restructuring Professional (CIRP – 1994), and a Chartered Professional Accountant with a Certified Management Accounting designation (CPA, CMA – 1992). His experience includes more than 25 years of helping individuals, small businesses, their owners and even lenders, find solutions to their debt problems.

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