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Residents of Alberta, including Red Deer, are among the highest earners in the country. Unfortunately, just as their incomes are the highest in the country, so are their levels of consumer and non-mortgage debt. While many consumers in Red Deer can successfully manage this debt, others struggle to make payments each month.
In some extreme cases, residents in Red Deer might need to do a bankruptcy. Bankruptcy is when a consumer is no longer able to continue to pay back their debt. The concepts behind a bankruptcy, in simple terms, is that you will surrender a large percentage of what you own to a Licensed Insolvency Trustee, in exchange for all of your debt to be wiped.
One of the very first questions many people in Red Deer often have about bankruptcy is how it affects their credit. Because bankruptcy occurs when you cannot pay off your debts, it affects your credit in a negative way. For example, Equifax uses a 1-9 scale for rating credit. A score of 1 is perfect credit, and a score of 9 is the worst.
When you go bankrupt, your credit rating will be a 9 for 6 years after your bankruptcy discharge. During this period, you may find it difficult to secure any sort of loan in Red Deer and borrowing money will likely be expensive.
So as you can see, bankruptcy affects your credit in a negative way, there is no way around it. However, this isn’t necessarily a bad thing. Sometimes, it is worthwhile to start from scratch and work to rebuild your credit than it is to simply struggle with debt for years and years.
Interested in learning more about what affects your credit score? Check out this infographic.
If you decide to file for bankruptcy in Red Deer, your credit will be in a bad place. As a result, if you want to borrow money affordably again in the future, you need to repair your credit. But what exactly goes into repairing your credit and what sorts of things will you need to do? Well, there are a number of different things you can do to improve or repair your credit in Red Deer after bankruptcy has ruined it.
While repairing your credit can be a long process, it will be worth it in the end. If you stick to your budget, be responsible, and create a plan, your credit will improve faster than you might think. Also, be sure to watch out for credit repair scams. Some fraudulent individuals or companies will try to prey on desperate people trying to fix their credit. No one can remove a bankruptcy note for a fee and be cautious of anyone who says they can fix your credit instantly. There are products and services that can help you work to rebuild your credit over time, but no one can fix your credit score overnight.
Check out this infographic to learn how to create a debt repayment plan.
Now that you know how bankruptcy affects your credit and financial health, how do you know when bankruptcy is the right debt relief solution for you? Red Deer has many different debt relief solutions and you want to ensure bankruptcy is the right one before moving forward.
Because bankruptcy is one of the most extreme debt relief solutions in Red Deer and Canada, in general, it is not the first one you should consider. Before you even think about bankruptcy, you should think about less intense options available in Red Deer and how they might work for your situation.
This includes things like credit counselling, debt consolidation, debt settlement, and a consumer proposal. These all accomplish different things, but more often than not, they may be able to help you. For example, debt settlement is when you work with an expert to make an offer to your creditors to pay off only a portion of your debt. These options are much less damaging to your credit and won’t cause you to lose any of your possessions.
For everything you need to know about bankruptcy court in Canada, click here.
While bankruptcy isn’t for everyone, there are definitely some people in Red Deer who would benefit from it. If you think bankruptcy is right for you, or you have more questions about it, don’t hesitate to reach out to Loans Canada.
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