Unless you were born with a silver spoon in your mouth, everyone gets into a financial snag from time to time. For some people it is worse than others. Perhaps they got in over their head with credit card debt, or maybe they made a business deal that did not work out. Whatever the case may be, there are plenty of people who think about declaring bankruptcy every year, and many of them do it. However, an alternative to bankruptcy may be a better solution for a lot of those same people.
1. Why You Should Try To Avoid Bankruptcy
The primary reason to seek an alternative to bankruptcy is because bankruptcy impacts your credit rating so terribly. It really sinks your credit rating and makes it difficult for you to borrow again in the future. Most of us have to borrow for some things such as a house or vehicle. Therefore, we do not want those borrowing options closed off to us if at all possible.
2. Considering A Consumer Proposal
A consumer proposal is one idea for avoiding bankruptcy. What this would do is allow you to make an offer to those who you owe money to. The offer is for a portion of what you actually owe, but if both sides can agree to it, this offer could stand as a fully paid back debt. Given that, you might be able to climb out from under that debt for a lot less money than what you otherwise would have had to fork over.
The consumer proposal route will involve formal negotiations that may involve bringing in a third party to help settle the matter. It all depends on the size of the debt owed, the flexibility of the creditor, and what kind of bargain you are asking for. It is important to remember with this method that you are in fact asking for a break on the debts that you rightfully owe. You should work in your own best interest but also remember what the creditor is looking for as well.
3. What To Do If Bankruptcy Is In The Cards
If you do decide to declare bankruptcy in the end, you will need to speak with a bankruptcy trustee. This is an individual who will review your assets and determine what needs to be sold off in order to repay those who have not yet received their money. It is important to talk to this person because they are going to hold so much power in what it is that you are doing.
It is nice to be able to avoid bankruptcy if you can. Often getting into a situation like this has everything to do with mindset in the first place. If you can change the way you think about money and spending, you may be able to avoid being in a similar situation ever again.