5 Signs You Should Not Be Considering Bankruptcy - Refresh Financial

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5 Signs You Should Not Be Considering Bankruptcy

 Considering Bankruptcy

Debt can creep up on us! You're living your life and then, all of a sudden you discover that you owe an astronomical amount! It's overwhelming and tough to know where to start if you plan to get rid of it. Luckily, there are safeguards in Canada for people who find themselves in this sort of trouble. There are debt consolidation options, you can opt to make a consumer proposal, and in the worst case scenario, there's bankruptcy. In many cases, people's knee-jerk reaction is to declare bankruptcy rather than exploring other options. Bankruptcy isn't always the best option. Here are five reasons you shouldn't be considering bankruptcy:

1. Most Of Your Debt Is Student Loans

- In Canada, student loans cannot be forgiven by bankruptcy. If what you owe is mostly to student loans, you'll have declared bankruptcy and still owe a good portion of what you did before. You're not gaining much by declaring bankruptcy in this situation.

2. Most Of Your Debt Is Cosigned

- If you've taken out a loan or a line of credit and your parents or another loved one has cosigned for it, they will be on the hook for the amount owing on the account if you declare bankruptcy. Will your relationship survive that? Will you be expected to pay them back the amount they paid off? Once again, you may find yourself in the situation of having to pay down the majority of your debt despite declaring bankruptcy.

3. You're Unwilling To Sacrifice To Pay Back Your Consolidation Loan

- If you've looked into a consolidation loan and you figure you can't make the payments but are not willing to sacrifice non-necessities from month to month, bankruptcy is going to be difficult for you. When you declare bankruptcy, you have to report your expenses and income to your trustee each month until the discharge date. You will be expected to live on a budget. If you can't do it for a consolidation loan, you won't be able to do it for your bankruptcy trustee.

4. You Have The Ability To Pay Off Your Debt

- If you can afford to pay down your debt after making some lifestyle changes but are not willing to, then bankruptcy is not for you. The thing is, you will be expected to make those exact lifestyle changes during bankruptcy. Reports to your trustee will show him or her everything on which you spend your money. Whether you do it now without the penalty of bankruptcy to be able to pay down your debt, or you do it with the scar of bankruptcy, you're going to have to make those changes.

5. You Have No Researched Other Options

-If your first impulse was to jump on bankruptcy and you have not spoken to a credit counselor of any kind, you're not ready to make this decision. Get yourself informed first. Find out how consumer proposals and consolidation loans work. Go through your expenses with a fine-toothed comb to identify changes you can make. Explore the possibility of having family help you pay down your debt instead, and then paying those family members back. You'll save your credit; you'll save yourself the hassle of having a trustee rummage around in your personal affair for a year and you'll save yourself the stress.

Bankruptcy is beneficial for very few people. Make sure you know what you're getting into. It's important that you understand whether or not it's the best option for you, your family and your collective financial future.

Have you ever considered bankruptcy? Let us know in the comments!

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