“It’s never wise to spend more than what you earn, you’ll eventually be on the verge of bankruptcy”– Ronald Reagan
Bankruptcy can be a difficult time for you to navigate through. You’re constantly facing the enigma of wanting to go back to your comforting life. However, you’re not capable of doing so due to no money. However, being bankrupt is not as bad as it seems.
It’s probably better to be bankrupt when your debts soar to a point where there’s no return. Yes, you’ll still be in a mess and be left with no money and belongings but you’ll be out of stress from those debts. Sometimes, you pay for a fraction of the debt with your belongings and you’ll still have a little bit of left.
So, what should you do if you’re debts are too high? Let’s get to the complete process before, during and after filing for bankruptcy!
Filing For Bankruptcy
If you’re filing for bankruptcy in Alberta, you should ensure that you know when to file for bankruptcy. This is because even if you’ve not planned for the sudden financial difficulty, things might just not turn your way. This is why you should ask yourself, ‘should I file for bankruptcy?’.
Approximately 100,000 Canadians file for bankruptcy every year in Canada, and you might be one of them.
You should file for bankruptcy if:
- You have a loss in income and have no money to pay the debts
- You’re debts are too high for you to maintain
- You’re heavily credit reliant – paying off debts leaves no money for everyday use
- You’ve reached your credit limits and your bank won’t provide any further financial assistance
How To File For Bankruptcy
Now, if you fall into the criteria discussed above, you can go ahead in filing for bankruptcy. However, you must follow some procedures to ensure proper filing of your bankruptcy claim. Let’s go through the process in details here.
Step 1: Find a Bankruptcy Specialist Attorney
Step 2: The attorney will provide you aid to prepare a Statement of Affairs which consists of all of your assets, creditors, incomes, expenses and other equivalent information needed.
Step 3: After filing official bankruptcy, most creditors will not be eligible to collect credits from you.
Step 4: You might have to attend a bankruptcy interview with the Official Receiver who is a government recruited official.
Step 5: You are to attend two financial counseling sessions.
Step 6: In case you have any kind of assets which you can’t keep, the Trustee will help you to sell them.
Step 7: You have to give a monthly report of your expenses and income to the Trustee. You are also to pay the Trustee an amount of money based on you earning, your family size and other necessary concerns.
Step 8: If it’s your first bankruptcy and there are no objections regarding you then you will receive a discharge from bankruptcy within 9 months. You will not have any further obligations relating to your bankruptcy.
Advantages of Filing For Bankruptcy
While the word ‘bankrupt’ may seem negative and bad, being bankrupt is not at all bad. It has perks that come along with it. The advantages of bankruptcy include:
- Legal protection from your creditors
- Cost of bankruptcy is relatively lower compared to the amount of debt
- Eliminates all debts (loans, credit cards, etc)
- You’ll usually be free from debts in 9 to 21 months after your first bankruptcy
Disadvantages of Filing For Bankruptcy
With advantages come disadvantages. Similarly, if you file for bankruptcy you might find yourself in some unwanted consequences. Such disadvantages include:
- Lowered credit score and credit history to the lowest level for around six years starting from the time you’ve filed for bankruptcy
- You might have to give away certain assets and streams of income
- You must provide a detailed income and expense information along with your income tax information
- The process can take a long time and may cause a lot of hassle
Bankruptcy and Insolvency Act
The Bankruptcy and Insolvency Act (BIA) regulate all of the bankruptcy and insolvency cases within Canada. A federally appointed government official, named the Superintendent of Bankruptcy, supervises the Bankruptcy and Insolvency Law. You’ll be reporting directly to the Bankruptcy and Insolvency Act office in your local province, and it will run through provincial rules and regulations.
Bankruptcy can be a difficult phase for individuals. There’s a lot to face – little or no money, huge amounts of debt and personal letdown. However, being bankrupt means that you don’t have to deal with the debts and you can live stress free.
To file for bankruptcy, you should be eligible to file for bankruptcy. Next, you should hire a professional bankruptcy attorney who can take you through the steps to filing for bankruptcy. This is very important because professional lawyers will work in your best interests to close the case as soon as possible. You should also know the advantages and disadvantages of bankruptcy.
Knowing these will help you navigate through your massive debt loads to a life where these are forgiven and you can start your life once again! It’s great, right?