When it’s time to deal with an impossible debt situation, many debtors assume there won’t be many bankruptcy options for going forward. Most ordinary people don’t know the details of how to claim bankruptcy, or what happens after a person is discharged. Bankruptcy is often, and erroneously, thought of as “the end of the road”.
However, the truth is just the opposite – bankruptcy actually offers a brand new start, and a reasonably quick one!
Should You Take Action?
Individuals experiencing financial stress often feel uncertain about when to declare bankruptcy. How do you know when your financial situation just won’t turn around? What are the rules regarding qualifying for bankruptcy?
Here are some signs that your financial difficulties are serious:
- you have paid off higher-interest credit cards with lower-interest ones, but soon all your credit cards are at their limits once again
- you routinely buy necessities (food, utilities) using credit cards
- you pay credit card bills using other credit card
- you have been turned down for a consolidation loan
- creditors are calling about late payments
Every one of these scenarios is stressful – but relief is available. Canadian bankruptcy rules state that anyone with debts over $1,000, who is unable to pay their bills when they are due, is eligible for personal bankruptcy.
What Are the Benefits of Declaring Bankruptcy?
- calls from creditors will stop
- it is relatively quick for most first-time bankrupt debtors – usually 9 or 21 months
- at discharge, your unsecured debts will be eliminated
With these benefits, there are also challenges:
- you will need to make financial reports to your Trustee
- you’ll have to rebuild your credit rating – but this is fully possible
- you may be required to give up some of your possessions
What Are Your Bankruptcy Options?
Now or later? – Your primary option is whether to start the process now, or later. You may feel that you want to give it a little more time – but at some point, if a major bill cannot be paid or a utility company calls, you’ll need to take action.
In retrospect, many individuals who have since been discharged from bankruptcy wish they had declared bankruptcy sooner, and avoided an extended period of uncertainly and fear during which their finances did not, in the end, improve. Unless there is a specific reason to believe the situation will turn around, you’ll lower your stress by acting now.
Choosing a Professional – If you’ve decided to act, what’s next? Many people look up “Debt Counselling” in the phonebook or online. Debt counsellors and debt assistance companies can give you advice (and many charge substantially for it) – but only a Licensed Insolvency Trustee (LIT) can assist you in reviewing your bankruptcy options.
In fact, seeing one of our Trustees is very useful even before you make your decision, becaus e the Trustee can advise on your best options, up to and including declaring bankruptcy. Licensed Insolvency Trustees undergo extensive education prior to receiving their license, and are in the best position to help you make an informed decision.