There is a staggering number of personal bankruptcy nowadays. According to Toronto Star, heavy personal debt loads combined with job losses have become unbearable.Reuters gave a quote by Craig Alexander, the deputy chief economist at TD; he said that the current amount of debt burden is higher than it was during the previous recession. He also noted that the average debt load of persons declaring bankruptcy was about $24,000 in the 1990s. This amount has increased substantially to $36,000.
Some experts opined that the rate of increment will reduce due to the almost stabilized number of unemployedpersons; others believe that bankruptcy rates will continue to increase further.
Alberta is one of the most affected areas where personal bankruptcies escalated by 102%. One area that fared better is Nova Scotians which has a lower increase of a little above 18%, an increase which is insignificant.
Regardless of where they reside, the fact is that many Canadians are in heavy debt burden. If you are one of those Canadians who are faced with bankruptcy, there are solutions.Doug Hoyes, a licensed Toronto bankruptcy trustee,in an interview with the Globe & Mail mentions some of the options. The options which you can make use of depends on the assets you have, the amount of debt you owe, any equity you may have in your home, etc.
A debt consolidation loan is one of the options which Mr. Hoyes suggest to his clients sometimes depending on their financial situation.
Basically, in debt consolidation, you borrow at a low interest rate, while using the equity which you have to service high-interest debt. For example, for a credit card which charges 19% interest, if you owe $10,000 and another $5,000 on a store payment plan which charges 18% interest, you may qualify for a debt consolidation loan at a lower rate and pay for the $15,000 which you owe. You will now be left with only one loan to service at a very low interest rate.
Lines of credit and home equity loans have interest rates which are similar to mortgage interest rates. Imagine servicing a loan at 6 – 7% interest rate rather than 19% interest rate you may pay with a credit card. You could get debt-free quickly and save thousands of dollars in interest.
Lines of interest and home equity loans are not for everyone but can help some people gain control over their finances and stave off bankruptcy. To learn more, speak with a mortgage professional with training in debt consolidation.
Making a consumer proposal is another option which can help service your debt. When you make a consumer proposal to your creditors, you will have the opportunity to put your debt under control by making an offer to pay off a portion of your debt. The proposal will be given to your creditors by the Toronto bankruptcy trustee who is referred to as a consumer proposal administrator when acting in this capacity.
Other bankruptcy options include structuring a debt management plan, debt counseling, and subscribing to debt management plan protected by a court.
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