To most people, the word bankruptcy is enough to strike fear deep into their hearts and cause untold levels of anxiety. Actually, having to file for personal bankruptcy isn’t the end of the world, but it still isn’t a solution you want to consider if you don’t have to. If you do, it means that you are suffering through debt and money problems and aren’t able to pay off your debts. Your problems may have been caused through a job loss or business failure, an abundance of student loan debt, or virtually any situation that has put a strain on your financial situation. People don’t save the way they used to, so it doesn’t take much one way or the other to send everything out of kilter.
In Canada, filing for bankruptcy has a handful of both advantages and disadvantages for you to consider. Bankruptcy will protect you from any legal action or wage garnishees and it will also take away your unsecured debts. It is also relatively inexpensive when compared to other debt options and usually doesn’t take very long. On the negative side, it can take a pretty heavy toll on your credit history, as it more or less resets it back to zero. You might have to hand over some of your possessions to a trustee and you have to keep meticulous records of your income and expenses during the time you are bankrupt.
Even though filing for bankruptcy in Canada sets your credit to nothing, a lot of people who file don’t mind too much because their credit rating is so awful to begin with, even having it set at zero is preferable. Many creditors consider someone who has gone through bankruptcy less of a risk because they no longer have any debt. So, even though it isn’t something that people strive for, it is certainly worth consideration if you are in trouble and are looking for a fresh start.
Of course, bankruptcy isn’t the only solution if you find yourself in money troubles. It is usually the final solution, when all others have been ruled out. Before that, you may be advised to try some form of debt settlement like a consolidation loan, a consumer proposal or similar debt management solution. Typically, in Canada you will be advised to opt for bankruptcy if you can’t pay your bills when they come due and you’ve tried all other options available to you. Anybody who is in debt more than $1,000 can file for personal bankruptcy in Canada.
The decision to file for bankruptcy is always a tough call. You can listen to advice from the experts but in the end it has to be your decision. Most or all of your debts will be gone, but your ability to get credit in the future will be affected. Take your time and go through each alternative before you decide. If you are drowning in debt and really need a fresh start, bankruptcy just might be the best alternative you have.
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