Many people face financial difficulties at some point in their lives. Sometimes, the situation is so catastrophic. Many people think of bankruptcy. But it doesn’t have to be that way. There are other alternatives. Debt consolidation is one of them. What is debt consolidation? What’s the best solution?
Bankruptcy
This legal procedure wipes out the unsecured debts of an individual unable to repay. It is generally the solution of last resort. Subject to compliance with a number of obligations, bankruptcy allows the discharge of (unsecured) debts. This includes personal loans and credit card debts. For a period of around 7 years, the credit file includes the mention of bankruptcy. At this point, the person concerned loses some of his or her assets. It will also be difficult, if not impossible, to obtain credit for a long time to come.
Debt consolidation and consumer proposals
In practical terms, your debts are combined into one. This means a single monthly repayment. There are two possible alternatives:
- Debt consolidation: a new loan is taken out to pay off all your existing debts. The applicable interest rate is lower than that of all your debts combined.
- Consumer proposal: you make a lump-sum offer to your creditors. This involves paying off part of your debts. This is done within a set period of time and without interest.
In both cases, you keep your assets. You save yourself the stress of managing several settlements. But be careful! It’s imperative that the agreed terms are strictly adhered to.
Which solution to choose?
The choice depends on your financial situation. If you have stable resources, debt consolidation is a viable option. If your debts are very high, bankruptcy may be the best solution.
Here are a few important tips:
- Evaluate your repayment capacity: Calculate the monthly payment you could afford after covering essential expenses. This will tell you whether debt consolidation is viable.
- Consult a professional: Always make well-considered decisions. If necessary, consult a licensed insolvency trustee. We can help you do just that. After studying your situation, we’ll guide you toward the right solution.
- Stay rational: Bankruptcy is not inevitable, but sometimes the only solution. In some cases, this legal option allows you to make a fresh start.
Conclusion
Faced with serious financial difficulties, you don’t know what decision to make? We can help. Our specialists will assess your situation. They will then identify the best option for you. Don’t hesitate to make an appointment to discuss your situation. Yes, you can take back control of your finances!
