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What Are Bankruptcy Alternatives
What are Bankruptcy Alternatives?
Introduction and Definition: Bankruptcy is the situation in which the individual or the corporate is unable to pay off the debts or credits that he owes. The main reason for bankruptcy nowadays is the recession as most of the banks and giant Corporates are declaring bankruptcy. The Bankruptcy declaration is the legal way or method of declaring that the person is unable to repay the credits. This causes most of the debts to be equalized while the future propositions for taking loans acquiring credits become far more difficult.
This is because Canadian law permits the removal of a bankruptcy notice from the credit report only after seven years. This becomes a serious side effect since most of the time, in order to get out of such a situation the individual or the company requires more debts. But since declaring bankruptcy causes taking further loans or credits a cumbersome project, there arises a need of alternatives for bankruptcy. These are known as Bankruptcy Alternatives.
Some of these Bankruptcy Alternatives followed in Canada are as follows:
* Doing Nothing The option of doing nothing becomes a very good one when a person does not have a source for a steady income or does not have any assets that can be acquired by the creditor against the debt. In most cases the creditor goes to the court for getting a judgment or ruling in order to get even on his credit and would most of the time get a favorable ruling. But this ruling would be a waste of effort incase the debtor doesn't have a steady income or property from which the creditor could get back his amount. So the Best of the Bankruptcy Alternative in Canada is to do nothing or taking no action.
* Debt Settlement Another good Bankruptcy Alternative is to negotiate the settlement of the debts. All the debtors know that if a person files for bankruptcy, he or she would be unable to pay the money and the debtor would completely lose most, if not all, of the money. Hence most of the debtors are usually open to negotiations that make returns to them at least in part, of the total money that was owed. Most of these debt settlements or debt negotiations are performed out of the Canadian Courts since the effort or cost would be much less and the debtor might even get a little profit.
* Debt Consolidation and Formal agreement with the creditors The debt consolidation is the process of combining all the debts into a single payment that could be transferred to a different credit organization with lower interest rates and paid off in small amounts over a long period of time. Another Bankruptcy Alternative is to arrange a formal agreement with the creditors. This can be done in Canada with the help of a licensed proposal administrator, who can formally file the petition for the agreement. After a period of Forty five days the creditors vote on the proposal so as to decide upon it. If there is more than fifty percent support, the proposal is passed. What are Bankruptcy Alternatives?
Introduction and Definition: Bankruptcy is the situation in which the individual or the corporate is unable to pay off the debts or credits that he owes. The main reason for bankruptcy nowadays is the recession as most of the banks and giant Corporates are declaring bankruptcy. The Bankruptcy declaration is the legal way or method of declaring that the person is unable to repay the credits. This causes most of the debts to be equalized while the future propositions for taking loans acquiring credits become far more difficult.
This is because Canadian law permits the removal of a bankruptcy notice from the credit report only after seven years. This becomes a serious side effect since most of the time, in order to get out of such a situation the individual or the company requires more debts. But since declaring bankruptcy causes taking further loans or credits a cumbersome project, there arises a need of alternatives for bankruptcy. These are known as Bankruptcy Alternatives.
Some of these Bankruptcy Alternatives followed in Canada are as follows:
* Doing Nothing The option of doing nothing becomes a very good one when a person does not have a source for a steady income or does not have any assets that can be acquired by the creditor against the debt. In most cases the creditor goes to the court for getting a judgment or ruling in order to get even on his credit and would most of the time get a favorable ruling. But this ruling would be a waste of effort incase the debtor doesn't have a steady income or property from which the creditor could get back his amount. So the Best of the Bankruptcy Alternative in Canada is to do nothing or taking no action.
* Debt Settlement Another good Bankruptcy Alternative is to negotiate the settlement of the debts. All the debtors know that if a person files for bankruptcy, he or she would be unable to pay the money and the debtor would completely lose most, if not all, of the money. Hence most of the debtors are usually open to negotiations that make returns to them at least in part, of the total money that was owed. Most of these debt settlements or debt negotiations are performed out of the Canadian Courts since the effort or cost would be much less and the debtor might even get a little profit.
* Debt Consolidation and Formal agreement with the creditors The debt consolidation is the process of combining all the debts into a single payment that could be transferred to a different credit organization with lower interest rates and paid off in small amounts over a long period of time. Another Bankruptcy Alternative is to arrange a formal agreement with the creditors. This can be done in Canada with the help of a licensed proposal administrator, who can formally file the petition for the agreement. After a period of Forty five days the creditors vote on the proposal so as to decide upon it. If there is more than fifty percent support, the proposal is passed. What are Bankruptcy Alternatives?
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