A financial hardship always seem to find a way through every person at a point in life. Not one person is exempted. Even the most careful, conservative spender, and literate will experience financial storms when negative circumstances such as career failure, medical emergencies, failed businesses and even poor economy happens.
There are usually a lot of options to look into for possible solutions, but when there is not a lot of working ones, filing for bankruptcy might possibly be the answer. This method has a way of effectively helping individuals get through a financial storm.
Good news is prior to filing for bankruptcy, people who are financially struggling can look at other options that can possibly help. In Canada, there are several ways to get out of any money problems and bankruptcy. These alternatives include debt settlement, credit counselling, debt consolidation, and consumer proposals.
Most of these solutions were built for people to have a less damaging solution to overflowing debts. While these solutions share the same purpose, each one has varying benefits and drawbacks. Not every listed solution, moreover, can be a good alternative to filing a bankruptcy.
Because financial difficulties and troubles can become uncontrollable at any time, many individuals still resort to bankruptcy as a way of protecting themselves. Canada allows this even without having to try the alternatives first. For instance, the process called debt consolidation offers a loan that essentially pays off all other debts, which in turn offers a smaller monthly payment arrangement, assuming the person’s credit is still on the viable side.
There is also what’s called Consumer proposals, wherein an adjusted total debt is negotiated and can be arranged for a smaller monthly payment.
Consumer proposals work for individuals with debts that run around $5,000 to $250,000 worth of debt. These known bankruptcy alternatives require every individual to have at least some ability to pay. By the time delinquencies and soaring debt become impossible to pay, bankruptcy proceedings start, which is usually the last resort.
When bankruptcy becomes the only viable option, it is about time for the person to familiarize the whole process. Bankruptcy may mean freedom from debt while having more money for basic needs, but it can also have considerable costs. This is why it is very important to deal with a licensed trustee when doing the process. This person is someone who has secured a license from the Superintendent in Bankruptcy pursuant to the Bankruptcy and Insolvency Act (Canada).
The role of the trustee for each case is to determine assets that are legally available for liquidation. Any asset that is not protected by the federal law is to be sold to pay the debts. For the bankrupt individual, he is required to make payments regularly to the trustee. Creditors also come to play an important role as some monies are paid to them to ensure maximum effort to meet the person’s financial obligations.
It is very important to remember that the trustee is working in the interest of your creditors, hence the first priority in their list are the people you owe.
In the finance world, asset loss and bad credit cannot be taken lightly. Bankruptcy information is made available to the public and it will be affecting a person’s credit rating for up to 14 years. In selected circumstances, the bankrupt individual will have no choice but to sell or surrender assets that are subject to repossession. In some cases though, Canadian law does protect certain essential assets.
This is if the reasons when filing for protection meet a specific set of criteria. In some cases, fines and different penalties are imposed by the court to people who commit offenses right when or during the bankruptcy proceedings.
Personal Canadian bankruptcy laws give bankrupt individuals a fighting chance from overwhelming debt by enabling these people erase monies owed. Being able to file bankruptcy in Canada may have very hard consequences but having to legally declare this is still the better option to foreclosure, repossessions, and further financial complications. It still can be considered a better state not to be able to apply for a traditional loan or obtain a credit if it is to be compared to being subject of oppressive, stressful financial obligations.
Knowing these facts, the best thing one can do is making sure not to go bankrupt. The first step is always finding and understanding what your options are.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.