How do I Qualify for Bankruptcy?
Generally, it’s not the value of debt that instigates bankruptcy, but your ability to cope up with paying your debts regularly. If you file for a manageable value of debt, you must consider the cost of bankruptcy against the amount you need to pay off your debts. Moreover, the minimum indebtedness for filing bankruptcy is $1,000. Thus, you must be insolvent to qualify in filing for Bankruptcy in Canada.
Moreover, if you think that filing bankruptcy is your only way out of debt, you have to be aware of the prerequisites at hand. If you have your debts to collections, or can’t handle even your minimum payments, filing for bankruptcy may be a viable option.
In This Guide...
Minimum Amount of Debt Needed
Most debt relief alternatives like consumer credit counseling do not necessarily require a minimum amount of indebtedness prior to qualifying. Besides, the minimum amount of indebtedness for filing bankruptcy must not be lesser than $1,000 of unsecured debt. Before you can file for bankruptcy, you must be held incapable of paying for your overdue debt. Plus, your asset value should be lower than you owe to your creditors to be considered insolvent.
Although you can file for bankruptcy for such a smaller amount of debts, you might need to consider its painstaking process. The minimum cost that you’ll pay for 9 months is $200 to $1,800 per month. So you might want to weigh these expenses of bankruptcy and its impact on your credit standing just to get rid of such a small amount of debt.
Value of Assets
If you have more debts yet high income, you might want to consider a consumer proposal. While bankruptcy will take the value of your assets to determine your qualification, a consumer proposal will not take it into value. Your trustee will oversee your financial capacity and urged a dispose of your assets to cover your debt payments. If your substantial assets are worth more than your debt, you can’t qualify for bankruptcy.
Moreover, you will have to present your asset to your bankruptcy trustee so your creditors can get a portion of the payment for your debt. However, some assets are exempt, which enables you to retain something that you possess. Hence, in a consumer proposal, you don’t have to give up your entire valuable assets, unlike when filing for bankruptcy in either territories or province.
Disposable Income in Bankruptcy
Filling for bankruptcy due to your incapacity to make regular debt payments is not a justifiable reason. Besides, you cannot file for bankruptcy if your income is adequate enough to cover your monthly obligations. Your struggle in paying for your monthly debt might just need a little tweak in terms of managing your expenses. If you feel that your debt is inevitable, it is commendable that you try other debt relief options; you can consider debt consolidation which is far better than bankruptcy as it won’t jeopardize your credit repute.
Conceding Debt Settlement
Two of the most useful debt relief alternatives are credit counseling and debt settlement. These options will not jeopardize your credit history as compared when you see to file for bankruptcy. To know more about the viable options for your situation, explore the possibilities of considering credit counseling and debt settlement.
