Bankruptcy Basics: Is Filing Bankruptcy The Right Choice?
The word bankruptcy itself creates a frightful notion. Although you may feel burdened by consumer debt, it’s not too late to put the pieces together and fix what’s broken. Also, better ask yourself: Is filing bankruptcy the right choice?
In Canada, numerous debt relief options are made accessible to those individuals who have been tormented by their debt. These options aim to give you a fresh start and better management of your finances. If you qualify and get discharged, you should make it a point to avoid debt and deal strictly with how you strategize your expenses.
On the contrary, you may find the process of bankruptcy as far more devastating as it seems compared to the other debt relief options. Before you take a leap, you might want to consider the other debt relief options available including consumer proposal and debt settlement.
In This Guide...
Should I Qualify for Bankruptcy?
If you qualify for any of the debt relief options, then you’ll surely qualify for bankruptcy; provided, your unsecured debt is not lesser to $1,000. Besides, you can file for bankruptcy in Canada if you’re incapable of paying off your unsecured debt or its minimum in each month. In contrast to a consumer proposal that has a debt limit of $250,000; bankruptcy does not set any debt limit to qualify for as long as your unsecured debt is not lesser than $1000.
What is Unsecured Debts?
Unfortunately, when you file for bankruptcy, it will not wipe out all your debts in an instant. It will only eliminate any unsecured debts concerning credit cards and consumer loans. However, an exemption would be through student loan forgiveness. You will only qualify if it’s not beyond 7 years since you were a student.
If you have home loans or any other secured debts, filing a bankruptcy will not eliminate such. Besides, bankruptcy will not free you from court penalties, maintenance, and payments for child support; plus, any debts that are relevant to fraud.
Bankruptcy can only be a viable option if you can no longer keep up with your debts and harassing creditors. Moreover, if your debt only concerns mortgages, still you won’t qualify for bankruptcy regardless of your province or territory.
Will I Lose All Assets in Bankruptcy?
If you’ve exhausted all possible means to overcome indebtedness yet cant simply knock it down; then, filing for bankruptcy is your last resort. Though at some point, you may be asked to give up your possessions to your bankruptcy trustee to cover your debts from your creditors; if you believe that bankruptcy can seize all your properties, then you’re absolutely wrong.
In Canada, the law dictates that you can retain some of your assets to aid you to start afresh. Thus, some assets are exempt from bankruptcy. The value of assets that you can keep may vary by provinces and territories.
In totality, your possession that is believed necessary for work is retained as well as your Registered Retirement Savings Plans, including your personal possessions like food and clothing.
Should I File for Bankruptcy?
To conclude, you should only seek in filing for bankruptcy when your income is inadequate to compensate for the amount of debt you owe from your creditor(s). You may perceive filing for bankruptcy too compelling. But it is imperative to comprehend how the process works and its outcome.
