If you are facing bankruptcy in Canada, you should know that it might not be too late to save your credit and your financial future. In light of this, here are five practical steps to avoiding bankruptcy in Canada that you can employ right now.
Canada, much like the United States, has recently undergone major changes in its financial services industry. Bankruptcy rules, for example, are now much more complicated and strict and as such people (in both regions) will have a much more difficult time trying to file bankruptcy than in previous years.
While this may sound disheartening to those who feel bankruptcy will soon become a favorable option, there are things that Canadians can do to try to avoid bankruptcy before it is too late:
Cut Back On Spending And Sell What You Can
Obviously, if you find that you are starting to run out of money before you run out of month you should start to cut back on your expenses. Of course, you can only reduce your expenses by so much and when this happens it is time to start thinking about selling some of your belongings.
While you may have sentimental attachment to some things, others are simply difficult to get rid of simply because they have become etched into your life. For example, you work hard and purchased your living room set to enjoy weekends at home with your family. Indeed, this is a cherished sentiment but when you look at the bigger picture, having a home to live in and reducing your debt is far more important than the furniture. Your family is more important. Thus, consider selling:
- Toys and other amusement devices
Fortunately, there are many ways that you can peddle your wares:
- Garage sale
- Estate sale
- Pawn shops
- Privately to friends and family
- Online outlets like eBay and even Craigslist
Consolidate What You Can
Eventually, you will run out of things to sell so you will need to find an additional strategy for making your payments easier. One thing you can do is consolidate your debts on a single credit card. There are many cards on the market that offer very low rates (often introductory and therefore temporary) on balance transfers. If you can open a new card with a higher limit, or if one of your cards still has some available credit, you can consolidate your debts to one account. This does several things:
- It makes it easier to track your debts with one statement coming every month
- It makes it easier to make payments since you only have one bill
- It makes it easier to avoid fees because you will only have fee should you miss your payment
- It is also easier to recover from falling behind on one account than it is with several accounts
Communicate With Creditors
Many people feel like the best thing to do when they cannot make payments is to hide from creditors. This, of course, is exactly the opposite of what you should do. As soon as you anticipate some financial difficulty, for whatever reason, you should communicate with your creditors to negotiate.
In most cases they will extend your grace periods and sometimes even lower your rates. When you tell them, for instance, that you are trying to keep your credit above par and that you want to avoid bankruptcy, they will be more willing to work with you because they do not profit from a bankruptcy; they profit from keeping your account open.
Count On Your Friends
Although it can be very tough to admit your hardships to your friends and family it is something that you will feel better about once you do. Of course, it is even more difficult to ask them for help but sometimes that is all it is going to take to get things back on track.
If money is tight and you know someone who may be a little better off, you might want to consider asking them for a small loan. If that is uncomfortable for you, ask your friends and family if they know someone who would be willing to pay you to do a job or make other arrangements so it feels less like an actual loan and more like friends doing favors for each other:
- Home repair
- Special projects
- Exchanging personal items/belongings
- Performing chores or other services in the future to compensate
Counsel With Professorial
Of course, you can always seek the aid of an educated professional. Credit counselors understand the details of the industry and will provide with all kinds of options, many of which you probably wouldn't think of on your own.
These 5 ways of avoiding bankruptcy are only a few options available, but they are likely the most common. Do not hesitate to consider these options and investigate others if you are facing the potential for bankruptcy in your future.