Due to the economic decline in the past several years, a lot of Canadians have found themselves facing serious financial problems. This overwhelming debt has caused many Canadians to seek assistance on managing their finances and getting out of debt. Two options Canadians have available to them are Bankruptcy and Debt Consolidation. If you are one of the thousands of Canadians facing a debt crisis, it is important to understand the differences between bankruptcy and debt consolidation so you can make a more informed decision.
Debt Consolidation
With debt consolidation, you will meet with a financial counsellor from a credit counselling agency or debt management agency. The program basically involves the consolidation of your debt into one monthly payment. You meet with a credit counsellor who will help you assess all of your debts, analyze your bills, and then determine the best financial strategy for you. Once determined how much you owe, your counsellor will calculate the amount you can afford to pay each month. The counsellor will then contact all of your creditors to negotiate a monthly payment plan. Once the debtors agree, you will send one payment monthly to the credit counsellor who will then distribute the payments to your debtors. The benefits of this program are no more late/penalty fees, one lowered interest rate instead of multiple interest rates, and one lump sum payment each month. In the end, you will have saved money and paid your debt faster than if you had not consolidated your debt. In addition to repayments, you will work with the counsellor to create a financial restructuring plan that includes creating and implementing a monthly household budget - you will learn how to manage your money more responsibly and you will learn how to rebuild your credit history.
Bankruptcy
Filing for bankruptcy is the process of releasing most or all of your debts. You will have a monthly payment plan for an amount determined by the bankruptcy firm. Bankruptcy stays on your credit report for approximately 7 to 10 years. Once the bankruptcy time period is complete, you are debt free. With bankruptcy, there are more restrictions, like having a negative effect of your credit score for instance. Although in bankruptcy you are not restricted from obtaining credit cards, mortgages, or loans, if you are able to obtain credit the interest rates can be extremely high. In fact, most people are able to get credit again within a year or two after their bankruptcy has finished.
In bankruptcy, your finances will no longer be private as everything is open to the courts. A trustee may be required to liquidate your assets and distribute to your debtors. And, should you have any disposable income, it may be seized to be dispersed to your creditors.
When people find themselves in overwhelming debt, it can be a devastating time that includes pressured and harassing creditor calls, family problems, depression, and anxiety. It may seem like there is no way to get the finances under control. Fortunately, there is help out there. Credit counselors and bankruptcy trustees can help people make the best choice to get out of debt and start living a more financially responsible stress-free life. When considering debt consolidation and bankruptcy, it is important to seek advice and understand the pros and cons of each. That way, you'll be able to make the best choice for you and your loved ones, and start living debt free.
Debt Consolidation
With debt consolidation, you will meet with a financial counsellor from a credit counselling agency or debt management agency. The program basically involves the consolidation of your debt into one monthly payment. You meet with a credit counsellor who will help you assess all of your debts, analyze your bills, and then determine the best financial strategy for you. Once determined how much you owe, your counsellor will calculate the amount you can afford to pay each month. The counsellor will then contact all of your creditors to negotiate a monthly payment plan. Once the debtors agree, you will send one payment monthly to the credit counsellor who will then distribute the payments to your debtors. The benefits of this program are no more late/penalty fees, one lowered interest rate instead of multiple interest rates, and one lump sum payment each month. In the end, you will have saved money and paid your debt faster than if you had not consolidated your debt. In addition to repayments, you will work with the counsellor to create a financial restructuring plan that includes creating and implementing a monthly household budget - you will learn how to manage your money more responsibly and you will learn how to rebuild your credit history.
Bankruptcy
Filing for bankruptcy is the process of releasing most or all of your debts. You will have a monthly payment plan for an amount determined by the bankruptcy firm. Bankruptcy stays on your credit report for approximately 7 to 10 years. Once the bankruptcy time period is complete, you are debt free. With bankruptcy, there are more restrictions, like having a negative effect of your credit score for instance. Although in bankruptcy you are not restricted from obtaining credit cards, mortgages, or loans, if you are able to obtain credit the interest rates can be extremely high. In fact, most people are able to get credit again within a year or two after their bankruptcy has finished.
In bankruptcy, your finances will no longer be private as everything is open to the courts. A trustee may be required to liquidate your assets and distribute to your debtors. And, should you have any disposable income, it may be seized to be dispersed to your creditors.
When people find themselves in overwhelming debt, it can be a devastating time that includes pressured and harassing creditor calls, family problems, depression, and anxiety. It may seem like there is no way to get the finances under control. Fortunately, there is help out there. Credit counselors and bankruptcy trustees can help people make the best choice to get out of debt and start living a more financially responsible stress-free life. When considering debt consolidation and bankruptcy, it is important to seek advice and understand the pros and cons of each. That way, you'll be able to make the best choice for you and your loved ones, and start living debt free.
About the Author:
When looking for a reliable debt conslidation firm, be sure to hire from the most experienced credit counselling Ajax company. With years of experience in debt consolidation, our team of trusted experts and bankruptcy trustee in Ajax can help with your financial needs.
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