Should I File For Bankruptcy?
Stressed out over consumer debt? Well, don’t be, because there are other means available in Canada for debt relief, now you have options to get one step closer to financial freedom. However, the one that people hear about the most is bankruptcy, should you qualify for bankruptcy it is an option that should be taken into consideration in order to get rid of your debt and have an opportunity to start fresh again financially.
It may very well be a drastic step, but of all of the different options available, which include debt settlement and consumer proposal, is bankruptcy for you?
The Qualifications for Bankruptcy
You would only be allowed to file for bankruptcy in Canada if you have a debt of $1,000 or more. Additionally, you must not be in the position of making the monthly minimum payments on those debts. It is different than the consumer proposal that has a limit on maximum debt for individual’s, which is $250,000 dollars, whereas, bankruptcy has no limitations on the amount you have in order to qualify.
The Debts Included in Bankruptcy
There are a lot of people who think that they are able to get rid of any debt that they have by filing bankruptcy, however, it will only take care of your unsecure debts. For example, consumer loans and credit cards. The exception to this rule is that student loans, which can only be excepted if it has been at least 7-years since you were a student.
A home loan is considered to be a secured debt, and it cannot be included in bankruptcy. Also, other debts that cannot be used in bankruptcies include, alimony, court fines, any debts related to fraud conviction, and child support. Remember that bankruptcy is only beneficial to you if you are overwhelmed by unsecured debts. Do not bother with bankruptcy if the only debt you have is a mortgage, as there are no exemptions on bankruptcies in either provinces or territories which can qualify a mortgage for a bankruptcy.
Will I Lose Everything in Bankruptcy?
A lot of people are worried about losing everything they own if they were to file bankruptcy. While this is true to an extent, there are some exempt assets. The trustee handling the case may require certain assets be surrendered, but individuals do not lose everything. They just require that you give up a little of what you own in order for your trustee to see to it the creditors that you owe do get some of what is owed to them. In addition, there is a Canadian law that stipulates you may keep certain property so you’re not left destitute as you start over once the discharges have taken effect. Some assets are exempt from bankruptcy, set a a provincial level. Visit the province and territory guide if you want to know the amount of specific exemptions.
It is typical for you to be allowed to hang on to any assets that would be needed and used at work, enough food to feed your family during the course of the bankruptcy process, clothing, and you’re Registered Retirement Savings Plans.
Should I File for Bankruptcy?
Bankruptcy should only be filed when you are out of options for other debt relief, and if you have such high debts with a low income that you cannot repay them. When an individual has a lot of debt weighing them down bankruptcy starts looking pretty good to them, but it is significant that you understand what is going to happen if you file bankruptcy, which is to have your credit ruin for a period of 7-years on the average, and you will have to give some of your belongings up.
Take into consideration all the other options that will help in eliminating your debt. Some will not hurt your credit as much as bankruptcy will, nor will they force you to give up your assets. Simply fill out our debt relief form to receive more information.