Have you been avoiding bankruptcy? Do you find yourself having a hard time keeping up with ever-mounting debt? Maybe your creditors have started garnishing your wages or you’ve received notice of a lawsuit against you. Perhaps you simply want to put an end to the collections calls that are coming in…
If this sounds familiar, it’s likely that filing for bankruptcy has crossed your mind.
Yet for many hard-working Canadian debtors, the stigma of bankruptcy is overwhelming. Many people believe that it will have a negative effect on their future ability to obtain credit. As a result, they do everything in their power to avoid it.
Instead many look for ways to avoid bankruptcy. However, depending on your situation, that actually could be more detrimental to you. As you avoid bankruptcy, your bills will continue to pile higher and higher.
Despite its drawbacks, bankruptcy has its advantages.
In many circumstances it can actually be the best option to help you get rid of your debt.
If you’ve been avoiding bankruptcy, here are 3 reasons you may want to reconsider filing.
1. You get protection from your unsecured creditors
Bankruptcy in Canada is a legal process, and as such, it offers benefits that other debt solutions cannot.
One major benefit of filing for bankruptcy is that the moment you file, an “automatic stay of proceedings” takes immediate effect. What does that mean? Put simply, your unsecured creditors must stop any action to collect on the debt you owe, including:
- An end to collections calls;
- Any garnishments against you will stop;
- Any legal action to collect the debt against you will stop;
- No legal action to collect the debt can be commenced; and
- Your bank accounts will be unfrozen.
This protection will allow you the breathing room to get back on track with your finances and to eliminate your debt.
2. You can address all your unsecured debt
When you file bankruptcy your creditors cannot opt out of your bankruptcy proceeding. In many other unofficial debt relief solutions like consolidation loans and debt management plans, creditors have the option to opt out. Conversely, you do not have to get the approval of any creditor to proceed with bankruptcy. Once you file, they are legally bound as outlined in the Bankruptcy and Insolvency Act.
3. You’ll finally be rid of your debt – so you can get the fresh start you deserve
If you carry out all of your obligations in a bankruptcy, you will be able to eliminate and put your unsecured debt behind you.
Certain obligations like child and spousal support obligations, speeding tickets and student loans will remain. If you have been out of school for less than 7 years, you can not have your student loans eliminated in a bankruptcy. The rest of your regular unsecured debts should be discharged.
The process typically takes about 9 months. With debt relief your bankruptcy will provide you with a fresh start. From there you can begin saving to build a healthier financial future for both you and your family.
Is Bankruptcy Right for You?
So, instead of figuring out how to avoid bankruptcy, consider whether or not the advantages outweigh the disadvantages.
Bankruptcy definitely has its advantages but, it is a decision that should not be taken lightly.
A Licensed Insolvency Trustee (LIT) is the only federally-regulated professional authorized to administer bankruptcy services in Canada. LITs offer free consultations and can help you explore your options.
Contact a Licensed Insolvency Trustee Today
Every debtor’s financial situation is unique. We can help you figure out whether bankruptcy is the right solution in your case. At your initial, free consultation, we will review your financial circumstances and explain each debt solution available to you.
We also offer our seasoned advice on the best solution for you and your family. And remember, the sooner you get professional help, the more options you may have available. Bankruptcy is not usually the only option to a debt-free life.