Alternatives to Bankruptcy

Think bankruptcy might not be for you? Here are some alternatives for you to consider.

Manage your money better. Each month, draw up a budget that lists all your monthly income and expenses. Study it carefully to see how you can increase your income or lower your expenses. Then use all the cash you free up to repay your debts.

Buy only necessary items and do away with luxuries. Cut down on shopping sprees and impulsive buying. Get rid of most of your credit cards as soon as you can pay them off. Most importantly, rebuild your credit rating, to get necessary credit more easily and at lower interest rates.

Seek professional help with budgeting and other money management skills from a professional credit counsellor. Most will offer initial services for free.

Get into debt restructuring or debt consolidation. Pay off all your unsecured debts with a single debt consolidation loan. You will only have to worry about one monthly payment with a lower interest rate but most probably a longer payment period. If, much of your unsecured debt is in high interest credit cards, the lower interest cost will make it much easier to get back in the black.

Consult with a credit counsellor and consider a debt management plan or consumer proposal. A credit counsellor can help you build money management skills. He can also help negotiate with your creditors to set up a debt management plan, with a single monthly payment and lower interest costs, spread over up to five years.