Credit may make a tremendous difference in our lives when handled appropriately, but sometimes we get overwhelmed with payments and may start to fall behind on repayments. Is your debt getting out of hand and making it really difficult to make your monthly payments on time? Filing for bankruptcy may wipe out all unsecured debts, but it still has certain downsides. It’s considered the last resort by debt experts, meaning it’s not something one should just jump into.

In this blog, we will go through what bankruptcy is, why you should avoid it (if you can), and how to avoid it.

Why Should You Avoid Bankruptcy?

1. There may be a great deal of stress and emotional baggage

Going through financial stress is not a fun activity. People who declare bankruptcy may feel like failures and may suffer from guilt over not paying back the money they had borrowed. It can be challenging to overcome the embarrassment of confessing this to family and friends.

2. Filing for bankruptcy has a significant impact on your credit

Equifax or TransUnion retains a record of your bankruptcy for up to six years following the date of discharge or your final payment. That is a tremendous amount of time to be denied credit. The majority of creditors won’t even consider lending you money if you have a bankruptcy on your credit report. That means you won’t be able to obtain credit for a very long time or you get one with a very high interest rate, which is not good enough.

3. Inability to get a good job

The ease of access to the Internet has led to an increase in the number of employers who do credit checks on applicants. Before giving you control over their business, employers want to be sure you can manage your finances. 

4. Loss of assets

Not all of your assets are exempt in bankruptcy, though some may be protected. If you have non-exempt assets, you will have to give them up to be sold, and the proceeds will be split among your creditors.

How to Avoid Bankruptcy in Ontario

Take Care of Your Basic Needs

Your basic necessities include food, utilities, housing, and transportation. Ensure that the family is fed, the lights are on, the rent is paid, and the fuel tank is full enough to bring you to work.

Live on a Low Budget

It’s not exactly easy to get out of debt. Therefore, the first thing you should ask yourself is: “Can you afford to pay back your debts all by yourself?” To get an accurate response to this, you should draft up a personal budget to determine the amount of money that is available to be put toward the reduction of your debts monthly. The next step is to compile a list of all of your debts, including your regular payments, and estimate how long it will take you to pay off all of those debts.

Get a Debt Consolidation Loan

If you’re having trouble paying off numerous debts, a debt consolidation loan can help you. A debt consolidation loan is a new loan that you take out to consolidate all of your unsecured debts into one payment. It consolidates all of your loans into one simple monthly payment and it usually results in a lower interest rate. You can also spread your payments over a longer time to lower your monthly pay. To obtain a consolidation loan, you must provide proof of a consistent source of income as well as the capacity to make monthly payments.

Consult a Debt Expert

When you need financial advice, it is sometimes preferable to discuss it with a debt expert. Discussing money is not easy—but you’re in the midst of it, and you need assistance which is available to you. 

One of the reasons why it’s important to speak with a debt expert is to get clarification about things you are unclear about. They will be able to critically analyze your situation and give you the best advice. You will get a free consultation at EmpireOne Credit Solutions.

Final Thoughts

Are you thinking of declaring bankruptcy?

While bankruptcy may be the best option in some cases, it really should be carefully evaluated because it has long-term consequences.

Before attempting to go for any debt relief option, discuss with a debt expert at EmpireOne Credit. We will listen to you and help you determine which option is best for you. We understand that personal finance and debt can put burdens on you, but you don’t have to worry because help is available. By speaking with us, you could reduce your debt by up to 80%, and interest will stop immediately. To learn more, call us at (416) 900-2324 to schedule a free consultation with one of our debt experts. Being debt-free feels good!