The best alternative to filing for bankruptcy in Canada is to reduce your debt on your own. Why is that the best option, if possible? Because your credit rating will look much better if you pay your debts in full than if you file bankruptcy.
How is it possible to reduce your debts on your own?
Make a Budget
Using your budget, determine if you can cut your expenses, or increase your income, to free up cash to repay your debts. Can you cut back on your cable television channels to save money? Do you need both a home phone and a cell phone? Can you prepare meals at home instead of eating out to save money? Consider all possible money saving options. Use your budget to plan your spending. If it’s not in your budget, don’t buy it.
Find Extra Sources Of Cash
Can you sell some of your assets to generate cash? If you have items you don’t use, this would be a great opportunity to have a garage sale, free up space in your home, and raise some cash to use to pay off your debts.
Consider asking family or friends for help. No-one likes to ask their parents for help, but they may be able to loan you some money to repay your debts. The key to making this work though is to be sure you have a firm plan to pay them back over time.
Contact Your Creditors
If you are only dealing with one or two debts you may be able to arrange for better payment terms. Ask your creditors (the people you owe money to) to give you a break. Ask your credit card company to lower the interest rate you are paying to help you pay it off sooner. If you have reasonably good credit, they may lower your rate, just for asking! If you have bad credit, or if you are often behind on payments, tell them you are considering filing bankruptcy. They may be willing to take a partial reduction now to avoid a larger loss down the road.
If you have a long term loan, like a bank loan, car loan, or mortgage, ask your lender if they will consider stretching out your loan to reduce your monthly payments. You may end up paying longer, but if it frees up some cash that you can then use to repay your high interest rate debts faster, than might be a good option for you.
You can also consider contacting your financial institution to arrange a debt consolidation loan. By combining your debts into one loan you may be able to reduce your interest costs and pay off your debt faster.
When It’s Time to Get Help
If it’s not possible to repay your debt on your own, it’s time to consider getting professional help. There are several bankruptcy alternatives that will allow you to avoid bankruptcy.
If you are struggling with your debts, talk to a Local Bankruptcy Canada Trustee about how they can help you eliminate your debts.