People file for bankruptcy when they are drowning in debt without a way of getting rid of the financial crisis. This legal status imposed on an insolvent individual means that he/she cannot repay the debts owed to creditors. Insolvency can result from various factors that cause your expenses to be much higher than your income. Chronic illnesses/disability, redundancy, expensive medical bills, among others, are among major factors that leads to your failure to keep up with the balance due.

You must remember that filing for the above legal status is a difficult and complex process. The legal process needs to be carryout with the assistance of a specialized attorney who is vastly experienced in helping insolvent individuals. The professional must have an updated knowledge about the existing law relevant to insolvency. If your only solution is filing for this legal status, make sure you obtain the assistance of a reliable and reputed lawyer who can tactfully present your financial crisis.

A good attorney can also help you find possible alternative solutions to your financial crisis. For this, it is essential to carefully review your financial situation. If you are legally declared that you cannot repay the debts owed to creditors, it can severely affect your credit. Depending on the negative remarks, the legal status can reduce your credit score by as much as 200-250 points.

Apart from affecting your credit score, the negative remarks will stay on your credit report for up to 10 years. That is exactly why filing for bankruptcy is a very tough decision. You should think twice before filing for this legal status and always look for possible alternatives.

Debt consolidation is one such excellent alternative. This helps you reach a settlement that is acceptable for both you and your creditors. In this process, you are given the opportunity to pay the creditors much less than the actual amount you owe. The negotiations are possible through the intervention of an experienced and specialized lawyer. The attorney will hold discussions with your creditors to agree upon a feasible settlement plan.

This alternative solution helps you get out of debt legally without a major affect on your credit. However, your present financial situation or income level has a significant impact on your chances of opting for this type of solution. If your financial crisis is a severe one, filing for might be the only way out. It helps particularly when you are facing the danger of foreclosure of your property.

Your attorney can help you decide upon debt settlement vs. bankruptcy. It is important to determine your extent of indebtedness before deciding upon a solution. For this, you need to have detailed information of your income, expenses and debts. A careful examination of these details can help the attorney to determine possibilities of going for a settlement plan.

You must carefully check your credit report and calculate your total debt. All sources of monthly income such as paycheck, rental income, alimony/child support, bank savings, investment returns, etc., should be considered when calculating your earnings. Your basic financial needs/expenses should be subtracted from the income. The balance will help your decide whether you should go for bankruptcy or an alternative solution.

If you have been searching far and wide for debt consolidation Toronto alternatives that fit your particular lifestyle and situation, then trust our experts.

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Author Bio: If you have been searching far and wide for debt consolidation Toronto alternatives that fit your particular lifestyle and situation, then trust our experts.

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