How can I work out what the best option is to help me get rid of my debts?
Everyone has a different debt situation, which means that the method they use to get out of debt may be different. Several factors come into play, such as how much the debt is, what sort of income is coming in, and what kind of debt it is. Just because you may feel overwhelmed, doesn’t mean that bankruptcy is your option. Too many individuals turn to bankruptcy before they try a service that offers them debt consolidation, informal agreements, and other solutions.
Believe it or not, you can negotiate with your creditors. When your creditors are presented with a reasonable proposal, such as that offered by a credit counseling service, they may agree to re-negotiate the amount that you owe, alter the terms in some way, freeze interest accumulation, and even re-negotiate the amount that you pay each month. They would rather get their money under an altered set of terms than not get their money at all. These are frequently called informal agreements, which are not legally binding, or debt agreements, which are legally binding.
If you own your home, your best option is going to be to refinance your home and borrow from the equity that you have accumulated. You can take that money and pay off your debts so that you have one payment for your mortgage, credit cards, personal loans, and other unsecured debt.
You can try a Part IX Agreement. This is where the majority of the dollar value of your creditors who vote, and have an entitlement to vote, have to agree to your proposal (your debt agreement), then the Part IX Agreement will not work. Your income must also not fall below a certain amount and your debt cannot be below a certain amount.
The last resort is bankruptcy. You can become bankrupt with any amount of money, but it is not suggested because bankruptcy takes away many of your rights. For seven years you cannot add to your assets beyond a certain amount. Being bankrupt can also have an impact on employment, on your ability to rent a place to live, and your ability to even leave the country. Being bankrupt could result in your passport being confiscated. There are even certain positions within your job that you cannot hold, such as CEO. If you are looking forward to that promotion, you may want to avoid bankruptcy.
So now you know what your options are. You can probably tell what options are best for you. Just make sure that you look at and try to exercise all of the options that are available for you before filing bankruptcy. Filing bankruptcy is literally trading one form of confinement for another kind.
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