Borrowing money is a way of life for many people nowadays. People take out loans and use their credit cards all the time. The problem with this is that debt piles up if you don’t pay for it. Many people have found this out to their misfortune. If you are one of those unlucky enough to be under piles of debt, here are some options available to you.
Increase Income
It can be surprising how creative people can be. If debt seems to be burying you, then try to create alternative sources of income. Starting a side-job can be a great way to fight off your debt problems. For example, you might have skills that you can use to earn an extra hundred dollars every weekend. Use your extra earnings to pay down your debt. When you have eliminated your debt, you can keep the job for additional money or give it up for more time for yourself.
Learn to Negotiate
Most creditors ideally want to get paid back. The additional interest is extra for them. If they see that you might be unable to pay the debt at all, you might be able to negotiate. If you have been good at keeping up your payments, some creditors can lower your interest rate. These are usually credit card companies who want to keep your business for a long time.
Set Up a Consumer Proposal
If you are facing debt and find nowhere else to turn, then you might be able to get a consumer proposal in North Bay and other Canadian regions. Consumer proposals are not going be that simple though. To qualify for it, you need to be an individual and have debt less than $250,000. You will have to formally ask for it from a Licensed Insolvency Trustee (LIT). This will now make you part of a legally binding process.
The biggest advantage of this is that all of your creditors will be immediately made to stop collection efforts and lawsuits. The LIT will then submit a proposal of a payment plan to your creditors.
The creditors then get to vote either to accept it or refuse it. If a majority of them accept, then all of your other creditors need to follow the payment plan. If the proposal is not accepted, then you either submit a new proposal or file bankruptcy. Many creditors will prefer to avoid you filing bankruptcy since that may mean they won’t get paid.
Filing for Bankruptcy
Filing for bankruptcy is the nuclear option when it comes to debt resolution. This essentially tells the world that you are broke and cannot pay your debts anymore. This can result in quite a bit of your debt being eliminated. But it also has a very negative on your credit score which makes future borrowing a problem. You are also not completely free of debt.
Depending on the bankruptcy filing, your assets may get seized to pay off as much of your debt as possible. You might end up losing a large amount of your non-liquid assets.
Getting rid of your debt is a major undertaking, but it can be worth all the effort. Without any debt, you have greater economic freedom. It would also reduce your worries in the future.