Avoid Bankruptcy through Personal Debt Management

Personal debt management is easier said than done. No person chooses not to pay his or her bills. If you don’t have the money, you don’t have the money. Debt can become unmanageable for so many reasons.

Regardless of the reason, whether you have lost income or you have simply become over extended, all reports indicate that the economy is improving. Canadians are looking for options to deal with debt without sacrificing their dignity and without filing for bankruptcy.

There are pro’s and con’s to bankruptcy. If you have no means whatsoever to pay your bills, are being garnished or have collection agencies after you, bankruptcy may be the best choice. Bankruptcy immediately protects you from your unsecured creditors and stops most collection action. The drawback to bankruptcy is, it is a long process, is often expensive and has a negative impact upon your credit. The choice to file for personal bankruptcy is one that should be considered carefully.

Statistics show that Canadians are looking for other financial choices to pay off debt. The challenge is simple, it seems that no matter where you turn someone has an agenda.

The banks often pay mortgage brokers. The banks promote their products to brokers and different products carry different incentives. The larger the mortgage and the longer the mortgage term, the more the mortgage broker earns from the bank. On that basis, if a small short-term second mortgage is the best solution, a mortgage broker may propose that you refinance your entire first mortgage. Sometimes it is better to pay the mortgage broker fee yourself and negotiate a shorter term more flexible mortgage product.

Many debt companies that promote “debt consolidation” only offer two choices, consumer proposal or bankruptcy. The best way to know if you are dealing with one of these companies is to ask them what options they offer other than bankruptcy and consumer proposals.

Of course, if you turn to your bank and they offer you help at all, it will come in the form of a credit product that yields them the most benefit. Most financial services representatives in banks are paid different incentives based on the products and services that they sell to you.

So what can you do when you need help with personal debt management and at the same time want to avoid bankruptcy altogether? Hire a company that offers a wide range of financial counselling services to help you find a solution to your money problems.

Here are a few good rules of thumb when looking for a good financial advisor:

You get what you pay for! It is better to pay for a service that is impartial and can help you make responsible financial choices vs. trying to sell you products and services.

Do lots of research. If you find a company, read through their website. See how diverse their ranges of services are. For example, debt counselling services that only offer federal government programs as the solution indicate that there is no incentive to encourage you not to participate if there is another option available that they don’t offer. Google the companies’ name to see if they have lots of credible published literature online or search for positive client reviews. Ask lots of questions to ensure that whatever personal debt management program you chose, you have chosen one that gives the most consideration to your credit and future financial goals.

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