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By Adrianna Notton
Every year, approximately 100,000 Canadians across the country file for bankruptcy. Unfortunately, there has been an increase in bankruptcy fillings due to the economic decline in the past few years. If you are suffering from personal financial difficulties, such as overwhelming debt, bankruptcy may be the solution. Before you make your decision, it is important to learn about bankruptcy in Canada.
Causes of Bankruptcy in Canada
If you are considering filing for Bankruptcy in Canada, it is important to be aware that you are not alone and you do not have to feel ashamed. Common causes of bankruptcy include: too much accumulated debt such as student loan, personal loan, credit card debt, etc, loss of income due to a job layoff, personal business fails, and the accumulation of overwhelming debt as the result of a serious illness or accident.
What is Bankruptcy?
When filing for bankruptcy, you will be eliminating all eligible debts usually within nine months. When you file for bankruptcy, you will wipe out your eligible debts and make a fresh financial start. It gives you the ability to free yourself from overwhelming debt. To go into bankruptcy, you need to be insolvent which means you have to owe at least $1,000 and not be able to pay your debts when they are due.
How does a Person go into Bankruptcy?
There are two ways you can go into bankruptcy. You can voluntarily file for bankruptcy or creditors can ask the Court to make an Order that you go into bankruptcy which is not that common.
What is a Trustee in Bankruptcy?
A Trustee in Bankruptcy, as described on the website of the Superintendent of Bankruptcy, says, ‘a person licensed by the Superintendent of Bankruptcy to administer proposals and bankruptcies and manage assets held in trust.’ You have to use a Trustee in Bankruptcy to go bankrupt. The role of a Trustee is to work with your creditors on your behalf, negotiate settlement agreements, and provide debt counselling. Once you have gone into bankruptcy, you will no longer have harassing creditors calling you at all hours of the day and night.
Bankruptcy Pros and Cons
There are a number of advantages to filing for bankruptcy. Bankruptcy eliminates unsecured debts and provides protection from legal action, collection action, and the garnishment of wages. However, you will be unable to get a loan, you will take a big hit on your credit score, you may be required to surrender some possessions, and it requires that you keep detailed records of your income and expenses while you remain bankrupt. In the majority of bankruptcy cases, only your creditors will know you have filed for bankruptcy. However, others could find out from public bankruptcy records, but this is rare.
If you are considering filing for bankruptcy, it is wise to talk to a debt/credit counsellor or Trustee to find out all of your financial relief options so that you can make a more informed choice that best meets your personal and financial needs. When you are drowning in debt, the best decision you can make is to take the essential steps to regain financial control over your life.
About the Author: Started in 1992, we are your trusted Credit counseling Whitby firm serving the Durham region. With years of experience in Debt consolidation Cobourg and credit counseling, you can be assured that we get results.
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