Bankruptcy Advice: 3 Reasons Bankruptcy Could Be the Right Choice

There are a variety of options for reorganizing your finances and the internet can make some look a lot better than how they actually turn out. We have talked with people who had previously been informed that they should not proceed with bankruptcy protection because it is “bad”.

Bankruptcy protection in Canada is a federally regulated process that has been made available by government to allow Canadians from coast to coast to obtain relief from their debts. It is designed to provide the honest but unfortunate person a fresh start. Is that you?

While there are many options to consider, such as obtaining a consolidation loan or entering into a debt management plan such as a Consumer Proposal, the bankruptcy option can be the right choice. Consider it to be just a tool in a toolbox. Instead of repairing a vehicle or a home repair, it is designed to repair your finances.

Here are three reasons why obtaining bankruptcy protection could be the right choice:

Your future income is uncertain.

If you are considering a consolidation loan or a debt management program such as a Consumer Proposal, having confidence in what your future income will be is very important. You definitely don’t want to expend the effort to start up such a plan and then find yourself unable to maintain the required payment because your income has changed some months later.

You need immediate relief from your unsecured creditors.

After contacting a Licensed Insolvency Trustee and filing a voluntary assignment into bankruptcy a federal stay of proceedings is created. This will stop collection calls, legal action by your unsecured creditors, and will even make the income tax department back off. Talk about peace and quiet!

Not all people who file for Bankruptcy are bad money managers. This podcast discusses the top reasons people file and why.

Your income is modest.

The Federal Government provides guidelines as to when you are required to make payments to your creditors in a bankruptcy. These guidelines take into account such things as family size, medical expenses, child care and child support. If you are above the guidelines you have what is called surplus, which is a poor choice of wording because whoever thinks they have surplus? However, if you are below the guidelines, then there are no specific payments required and the only financial cost would be in regards to the federally regulated trustee fee. This could result in a bankruptcy being finished within 9 months at a very modest cost. In contrast, most debt repayment plans result in thousands of dollars being paid over as much as sixty month or five years. If your income is modest, and below the guidelines, in our opinion your household could be better off with a bankruptcy filing. We would strongly recommend you consult with a Licensed Insolvency Trustee to obtain a detailed analysis of what the cash flow would look like with each option.

While some of these terms may sound intimidating make an appointment and ask questions! In our experience, once you find out the details, debt stress will leave your life. Why not make that first appointment, it’s free!