Bankruptcy Is Not The Only Option

By Adriana Noton.

Declaring bankruptcy is one of the ways a person can deal with his debt. But it is not the only way. Filing will have many long term consequences as well. The filing will stay on a person's credit report for seven and sometimes up to ten years.

Because of recent legislation, it is not as easy to file as it once was. The filing has to be approved by the judge. There are many factors that will be examined. If it is determined that the person who has filed has the means to pay off the debt, then the filing might be denied.

People who are looking for a quick way to extinguish their debt might find that their filing is not approved. If the filing is approved, there are of course advantages. The person filing no longer has any debt to pay off. Creditors will not be calling or harassing the debtor.

Some have heard that once a person has declared insolvency that he will not be able to get credit or be approved for a loan. This is not necessarily true. Some credit institutions will give a credit card to a person who has filed. But of course the interest rate will be very high. There are some lenders who will approve a loan, but again the interest rate will be well above the normal rate.

There are other options to filing for insolvency. Most people file because of their credit card, or unsecured debt. The unsecured debt means that there is nothing for the creditor to attach, or repossess. This means that a creditor might be willing to negotiate a settlement with the debtor. The debtor has the option of dealing with the lender, or he can seek help from a professional credit negotiator who will work with the credit card companies on his behalf.

Creditors who cannot recover the money owed them by a debtor will sell the loan to a collection agency for as little as ten cents on the dollar. This is a ninety percent loss for the creditor. A credit negotiator can offer the creditor a settlement offer of fifty percent of the balance that is due. This is better deal than ten percent the creditor would get by selling the loan.

The negotiator can also explain that the debtor will be close to insolvency. If the filing is approved, the debtor might get nothing. If the creditor agrees to a settlement, the debtor can avoid filing, and the creditor will at least receive half of the money that is owed.

Bankruptcies are increasing because of the tough economy. People are losing their jobs and simply do not have money to pay back their debts. For this reason, there are more creditors willing to work with debtors and come up with a settlement agreement. This is why people who are thinking of filing for insolvency for example file bankruptcy Toronto or file bankruptcy Durham redion should consider credit negotiation.

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