Bankruptcy is not the only option to address debt
Unfortunately, it’s not difficult to find yourself in financial hardship.
Sometimes getting turned around simply involves getting help with budgeting or restructuring payments. Other times, however, more help is needed.
This is when professionals like Dawn Golding come in.
Golding is a licensed insolvency trustee with Golding & Associates Limited based in both Kentville and Halifax. She helps debtors understand their rights and options.
“Unfortunately, people are often scared to call us because they think if they do, they have to file bankruptcy, which is not the case at all,” explains Golding.
WHAT BANKRUPTCY MEANS
If one does file for bankruptcy, there are long-term consequences.
Bankruptcy reporting timeframes are determined by provincial laws, explains Golding.
A bankruptcy is reported for six years from your discharge, or seven years from filing a first bankruptcy. A second bankruptcy, however, reports for 14 years.
The bankruptcy automatically is removed from the credit report once the timeframe has passed. It cannot show up longer than that, she says.
It’s important to clarify there is a difference between the time a bankruptcy is shown on your credit report and when a person can start to reestablish credit, says Golding. It’s not necessary to wait until the bankruptcy is gone from the report to start reestablishing credit.
You can start re-establishing after you are discharged from your bankruptcy.
HELPFUL TIPS
To avoid having to file bankruptcy, Golding offers several important tips for dealing with debt.
Budget – A budget will not only help you pay your debt off faster, but more importantly it will add to your overall financial security, says Golding.
People often make a plan for their money each month and yet the plan does not work. Then they get frustrated and stop trying to make it work. The first thing you need to do before making a plan is to figure out where your money goes each month. Track your spending, not just the big things because small things add up and are easy to forget about it, says Golding.
“After you have tracked your expenses for a couple of months, you can then plan with actual numbers.”
Compare what you planned against what actually occurred then make appropriate adjustments to either your plan or your spending, suggests Golding.
Pay off highest interest rates first –
Keep track of who you owe and the interest rates on your debts. Paying down your debts with the highest interest rates first will get your debt paid off sooner, says Golding. The snowball debt repayment system uses this method. You can find snowball debt calculators online that can help you with a plan, she says.
Get a consolidation loan – Having one payment and set term to pay off the debt can be a solid solution in some situations, says Golding. The most important thing when getting a consolidation loan is to get rid of the credit cards you are consolidating so they do not get used again and you find yourself in a worse situation.
Avoid payday loans – Avoid at all costs, warns Golding. The interest rate on them is extremely high and once someone starts with one, it’s nearly impossible to get clear of it and they find themselves in a cycle of reborrowing every payday and spending hundreds of dollars a month in interest in doing so.
Call around for savings – If seeking services like insurance, Golding recommends phoning around and checking online for quotes when their insurance is coming up for renewal as often they can get better deals with a new company.
Don’t automatically think of bankruptcy – Bankruptcy is not the only legal option to deal with debt. A consumer proposal is a compromise between a debtor and their unsecured creditors where all the debt is consolidated into one payment, typically without interest and for a percentage of the balance owing. A consumer proposal is unique to the individual’s situation, says Golding.
Ask for help – “Debt can be very stressful. Don’t be afraid to ask for professional help with your debt if you are feeling overwhelmed,” says Golding. Sometimes your creditors can help. If the situation is beyond that, you can speak with a licensed insolvency trustee.
https://debtandcreditsolutions.ca/
“Unfortunately, people are often scared to call us because they think if they do, they have to file bankruptcy, which is not the case at all.”
Dawn Golding
Licensed insolvency trustee