Watch this before you declare bankruptcy.
Declaring bankruptcy is a big decision. But it isn’t one that you should shy
away from. Life is notorious for coming up with the unexpected, a promotion, an
illness, a pregnancy, or a breakup. Sometimes the unexpected gives us hope. Sometimes it throws us into turmoil and sometimes it can send our financials
into a tailspin. If you are struggling with overwhelming
debt, bankruptcy might be the right next step for you. Bankruptcy gets a bad rep, but for certain debt situations it can be a godsend. Declaring bankruptcy will wipe away your unsecured debts. It gives you immediate protection from your creditors known as a stay of proceedings.
This means that creditors and collection agencies can no longer contact you. All
legal proceedings that creditors have against you must stop and wage
garnishment will stop. Additionally, every debtor who declares bankruptcy is
required to complete two credit counseling sessions. These sessions will
identify the root of your debt problems and provide you with the tools you need
to keep yourself out of debt. If there are no special circumstances most
first-time bankruptcies will be discharged in just 9 months. There are a
few things to keep in mind before you declare bankruptcy. A bankruptcy will be
marked on your credit score for six years after your discharge. If you have
assets besides your home and car, say a boat or ski-doo, you may need to turn
those over to the trustee for the benefit of your creditors. However you
are allowed to keep your basic assets. These may include your home, your car,
your pension, any RRSPs, furniture, clothing and tools you need for work. If
you have surplus income over and above what the government has determined is
necessary for a family of your size, you will be required to pay fifty percent of
that surplus to the trustee for the benefit of your creditors. A bankruptcy
does not relieve you of some student loan debts, fines of the court, child
support payments and alimony payments. There are alternatives to bankruptcy.
There are a few other insolvency options that may fit your financial situation
better than bankruptcy. Consider a consumer proposal. You may qualify if you are less than 250 thousand dollars in debt. This insolvency solution can reduce
your debt by a substantial amount. Some even as much as 95%. Through your trustee
you make a proposal to your creditors as to the sum that you will repay and the
time period in which you will pay it. Once the proposal is agreed to by your
creditors it is legally binding on both you and the creditors. A consumer
proposal is listed on your credit score for 3 years starting from the time the
final payment is made and the proposal is completed. A proposal allows you to
keep your assets. In order to find out which solution is best for you, you need
to first contact a Licensed Insolvency Trustee LiT. In Canada, an insolvency
proceeding like bankruptcy, a consumer proposal or a Division one proposal can
only be legally administered by a LIT. if you are thinking of declaring
bankruptcy in Winnipeg, give us a call. We can set up a free consultation with one of our experienced LIT’s.