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Bankruptcy only makes sense when a review of your current financial situation and a look at the foreseeable future shows that you will not be able to service your debts, even if reasonable changes are made.
There are some concrete disadvantages to declaring bankruptcy:
- If you have non-exempt assets (possessions) such as real estate, a car, high end furniture, jewellery, a boat, power tools, etc. you may need to surrender them to your trustee to be liquidated to pay your creditors.
- It will affect your credit history for at least seven years. While it still may be possible to take out a loan, get a credit card, mortgage, etc. after bankruptcy, it will be harder and your interest rates will probably be higher.
- You will have to surrender all credit cards, although you may be able to get one after your bankruptcy is discharged.
Possible negative emotional consequences of declaring bankruptcy:
Even though almost a 100,000 Canadians filed for bankruptcy or a consumer proposal in 2007, many people feel a great sense of shame or failure when they are unable to repay their debts. Hopefully, you will be able to change your view point and simply evaluate what led to the bankruptcy and make the changes necessary to avoid ending up at the same point again. Your bankruptcy trustee will be part of this process through the financial counselling sessions.
IN THIS SECTION
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- Why did my trustee tell me to file all outstanding tax returns?
- I’m declaring bankruptcy because of taxes. Is this allowed?
- Will I still owe my student loan after bankruptcy?
- I can’t afford to pay back my student loan and it’s been less than seven years since I left school-what are my options?
- How long does bankruptcy last?
- Can I keep my car during bankruptcy?
- Can I keep my RRSP during bankruptcy?
- Can I keep my home if I declare bankruptcy?
- Will I still be able to rent an apartment or home if I declare bankruptcy?
- Can I keep a credit card during bankruptcy?
- Is it okay to use a credit card if I am thinking about bankruptcy?
- Can I get a checking account after bankruptcy?
- I co-signed on a loan for someone who declared bankruptcy. What happens now?
- If I’m married and I file for bankruptcy, does it affect my spouse’s credit?
- If my spouse declares bankruptcy and I am listed on their credit cards, am I responsible for the debt?
- I am divorced and my ex has declared bankruptcy. Do I still owe for debts and credit cards that I co-signed with my spouse?
- If I file for bankruptcy, will it be noted on my spouse’s credit file?
- Will filing for bankruptcy affect my job situation?
- Who will find out about my bankruptcy?
- Can I get utility services (telephone, cable, hydro, gas, etc.) after bankruptcy?
- Can I keep any money if I declare bankruptcy?
- What is surplus income?
- Can I go to jail for not paying my debts?
- The collection agency is threatening to take me to court: can they do that?
- What happens if a collection agency takes me to court?
- I am behind on my debt payments; can a collection agency take my furniture, electronics, clothes, etc.?
- I am being harassed by a collection agency: what can I do?
- Can I stop a wage garnishment?
- How do I find out if someone is bankrupt?
- What is Chapter 7 bankruptcy?
- What is Chapter 13 bankruptcy?
- What happens if I live in both Canada and the U.S. and declare bankruptcy?
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