3 Financing Options to Explore Before Declaring Bankruptcy

Filing for bankruptcy can be one of the most devastating experiences for anyone, be it an individual or an entity. While losing money doesn’t necessarily connote poor financial management, it can still tarnish one’s credit score and history for years to come no matter the reason for the unmanageable debt. 

Before declaring bankruptcy, it’s important to explore financial alternatives that can help ease the burden it leaves. Keep in mind that filing for bankruptcy can cut off a whopping 100 points from one’s credit score, which means it will be more difficult to apply for loans in the future. So before throwing in the towel, it’s worth exploring other ways to cut down debts without compromising one’s credit history. 

Different Debt Resolutions to Explore Before Resorting to Bankruptcy 

Tip #1: Discuss Debt Settlement Options with a Creditor

The thought of paying for debts seems like an established agreement that no one can back out of, but there is a chance to settle debts at a lower rate by talking to creditors. This is not necessarily a solid solution since it primarily depends on the willingness of the creditor to accept partial payments of as much as 25-50 percent of the debt, though creditors are likely to consider the offer only if the borrower can no longer afford to meet minimum monthly payments. 

Tip #2: Liquidate Assets 

Selling or liquidating one’s assets can be an excellent way to mitigate bankruptcy and pay off remaining debts. Some of the valuable assets that can help shave off the burden of bankruptcy include selling vehicles, equipment, financial investments, store fixtures, real estate, machinery, or even decorations such as fine art. No one wants to sell assets, but it’s a better alternative to solve debt problems and keep credit ratings at an ideal score. Business owners may have more valuable assets to sell, though it’s important to cut down assets that won’t disrupt the critical operations of the business.

Tip #3: Debt Consolidation

Juggling different debts can feel like a balancing act for many borrowers, which can be overwhelming and tricky to organize. Instead of paying for different financial arrangements, debt consolidation can combine multiple debts from mortgages, car loans, credit cards, and other debts into a new, single loan. This makes it easier to pay off monthly arrangements that are more affordable and simpler to manage. 

The Bottom Line: Other Ways to Settle Debt Before Filing for Bankruptcy

The reality of reaching bankruptcy can deal a devastating blow to anyone, but since filing for bankruptcy can make or mar one’s future financing options, it’s worth exploring other options to settle debts without resorting to bankruptcy. Seeking financial counselling from professional financial advisors like Debt Helpers, for instance, can offer better alternatives that can mitigate the long-lasting consequences of declaring bankruptcy. 

How Can Debt Consultants in Canada Like Debt Helpers Promote Financial Wellness?

Dealing with finances can be tricky and emotionally draining, but it’s important to take the right steps to achieve financial freedom. Debt Helpers provide customized debt solutions for Canadians. 

Debt Helpers offer a range of consulting services and solutions designed to help clients reach financial goals and become debt-free. Learn more about Debt Helpers’ services today!