According to the latest data provided by The Government of Canada, 132,253 bankruptcy cases were filed between August 2010- August 2011. Although, the number of insolvencies was down by 9.9% when compared with the previous period, the figure is still high. People, reeling under heavy debt, often consider bankruptcy as an option to get rid of their pending bills. However, they do not realize the drawbacks that are associated with it.
Bankruptcy remains on the credit history of the person for many years from the date of declaring insolvency. It remains in the records of the court for 20 years. Bankruptcy affects the future prospects of getting credit, as a bad credit history minimizes the chances of getting loans. The financial situation of the debtor will be advertised in the newspaper. He will lose all his assets including house and car. Any business hold by the person, who declares his bankruptcy, will be closed immediately. Future job prospects may be minimized.
Another option to consider is debt consolidation. There are many benefits of debt consolidation over bankruptcy. A consolidation program requires a person to pay a single payment every month. The interest rate on the debt is substantially reduced or totally eliminated in most cases.
Debt consolidation is a consumer friendly approach to clearing the debt. People suffering from heavy debt loads can stop the frequent phone calls from creditors and collection agencies.
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