People who are in a significant amount of debt and face the possible loss of their home, repossession of vehicles and property, and a mountain of fees, fines, and penalties are emotionally overwhelmed in trying to solve the problem.
Many individuals in Victoria in this situation assume that bankruptcy is the best and most practical solution to their debt. While bankruptcy may be an option, working with experienced debt consultants allows the individual to see the possibilities and choose the right one.
Some of the most common myths about bankruptcy in Victoria include:
Bankruptcy clears all debt – not all types of debt are included in bankruptcy. This includes secured debts such as car loans and mortgages, as well as student loans, child support, alimony, and court-ordered payments (fines or restitution), as well as some others.
You can add to your debt right up until bankruptcy is filed – creditors have the option to oppose an application for bankruptcy. This is often seen when the individual makes large credit card purchases in the weeks or months before the filing.
Bankruptcy does not hurt your credit score – bankruptcy will have a negative impact on your credit score for six years. After that, there is additional time required to rebuild your score. This can make getting a loan or qualifying for specific financial tools extremely difficult.
Bankruptcy is the only solution – working with debt consultants allows the Victoria consumer to explore the possibilities other than bankruptcy. These can include Consumer Proposals, debt consolidation plans, or even refinancing options.
Talking to debt consultants before making the assumption bankruptcy is the only option is a simple way to get the big picture.