Debt management comes in many forms. For some people, that can mean bankruptcy. Many people do not realize, however, that filing for bankruptcy is not a quick and easy process. Instead, it can take quite some time from the time you start to think about filing and when your debts are discharged. During this time, you will likely continue to receive many phone calls from your creditors even as you try to gather the needed documents and materials. In addition, you will continue to accrue interest charges at the current rate on your accounts.
Another thing many people do not realize about filing bankruptcy is that they will lose the ability to control most of their assets. Those assets could be sold in order to satisfy your creditors. You will also need to declare that you have filed bankruptcy when you apply for a job.
Fortunately, filing for bankruptcy is not the only route to debt management. There are several other options that can be attractive while also keeping your credit rating and saving yourself some stressful times. A skilled credit counselor will be able to guide you in the right direction so that you can pay off your debt. There are several types of arrangements that can be made between you and your creditors.
Arrangements – Consumer Proposals
An arrangement that may be helpful for your circumstances is an informal arrangement. This type of arrangement will enable you to pay your debts but at a reduced rate. This is arranged through your creditors. This type of arrangement is typically used for debts from personal loans and credit cards.
Another type of arrangement that can often be reached with your creditors is called an individual voluntary arrangement. It is also known as an IVA. This type of arrangement is a formal one and must be set up by a professional who is licensed. An IVA involves your creditors and a credit counselor meeting together to set up a legally binding agreement. The credit counselor will work with your creditors to get the lowest payments for your debts. Typically, after five years, the reminder of the debt is erased.
Although it is easy to become overwhelmed by your debt when it is large, with the proper knowledge about debt management, you can reduce your stress and create an actionable plan. Choosing a credit counselor who is knowledgeable about the options available for people in your situation will ensure that you are aware of all of the available options.