Bankruptcy is not always the best solution for financial problems. Sometime it does more harm than good.
When you are experiencing financial difficulties you may consider different options. If you have two creditors or more, first, try to secure a consolidation loan from a bank or trust a company where interest rate is lower compared with secondary lenders, like: finance companies.
If your application was turned down, you may go to a secondary lender to consolidate your debts. You may be able to get a consolidation loan from sources other than bank or trust company, but be conscious of high interest rate. If you consolidate with high interest rate your financial situation may not improve. Before signing on the dotted line, make a calculation to be sure it would solve your problem.
When you consolidate at high rate of interest, and it would not solve your financial problem, you may to consider credit counselling, consumer proposal or bankruptcy as a last resort. The question that you would ask is “what is best for me, credit counselling, consumer proposal or bankruptcy?”
It is not easy to answer the said question without looking closely your income, assets, and liabilities. An objective analysis by a qualified person on those three items could give you a reliable answer. Do not file credit counselling, consumer proposal or bankruptcy if it is not best for your circumstance.
Weigh your options before deciding what action you have to take to overcome your financial difficulty especially if it is bankruptcy. If you wrongly file for bankruptcy, you may lose your precious assets when you do not have to. Not only that, your credit rating would be worse than credit counselling or consumer proposal.
An example: a couple who wrongly filed bankruptcy thinking that it was their only solution for their financial problem, as a result, they lost their house, a car, RRSP and their children educational plan which could have been prevented should they explore other alternative solutions.
Choosing the appropriate solution for your financial problem is not always easy. If you are not sure of what you are going to do, it is prudent for you to ask a second opinion (it is usually free) from a financial expert, to avoid losing unnecessarily your precious assets when you could rightfully keep them.
Adam Aspilla operates the Debt Clinic of Canada Inc. (an accredited member of the Better Business Bureau), A former financial planner, a former mortgage broker, and the author of the book, You Can Negotiate All Your Debts. He also writes another column, “Biblical Perspectives” in this paper. For a free initial, expert, professional and confidential financial consultation on your financial problems including issues on power of sale, call 905-306-7572 or visit www.debtcliniccanada.ca