How do you file for bankruptcy?
If you are unable to repay all of your debts, do not stay alone with your problem. A financial advisor, mortgage broker or trustee in bankruptcy can explain the consequences of your over-indebtedness, the benefits of filing personal bankruptcy via bankruptcy-basics.org and accompany you throughout the process to reset your credentials.
Personal bankruptcy is a right that you exercise, a remedy that gives you the ability to prevent your situation from deteriorating when all other alternatives have been ruled out. Declaring bankruptcy allows you to start afresh, on a new basis, to take back your budget and, consequently, your financial health.
Do you have the right to declare bankruptcy?
To be eligible to declare bankruptcy, you must meet the following conditions:
- Be indebted for a minimum amount of $ 1,000
- Being unable to pay your debts and other financial obligations when due
- Present a higher liability than your assets (more debt than having)
- inconvenient benefits personal bankruptcy
Declare Bankruptcy to Clear Your Releasable Debts
Personal bankruptcy will free you from your erasable debts such as your car loan, credit cards, tax debts, etc. Their refund will no longer be required.
Declaring bankruptcy, however, will not erase all your debts without exception. The debts that will remain are:
- Tickets, penalties, and fines
- Any student loan if the end of your studies is not older than seven years
- Fraudulent bonds or debts
- Compensation for bodily harm to others
The other benefits of declaring personal bankruptcy
personal bankruptcy benefits the Bankruptcy and Insolvency Act 178 is intended to help all parties involved: you, as an honest debtor, but living in an inextricable financial situation, as much as the creditors to whom you owe money.
It is the role of the trustee in bankruptcy, now called the Insolvency Trustee (IAD), to administer the bankruptcy so that your rights and those of your creditors are respected.
Thus, in addition to freeing you from your erasable debts, the involvement of a trustee in bankruptcy:
- You keep lawsuits brought by your creditors against you
- Stop calls from creditors wishing to recover the sums due. They must now deal directly with the trustee in bankruptcy and stop harassing you
- Causes the interruption of the seizures (property, salary …). Your creditors will not be able to contact your employer to ask him / her to deduct a portion of your salary in order to be reimbursed
- Causes the freeze of your interest charges. Payment of your interest charges will no longer be required. In addition, no other interest charges will inflate your debt.
- Protect some of your belongings like:
- Clothing and the necessary food
- Some furniture required in a principal residence
- The tools and instruments you need to work
- Child support and pension funds from your job
- Some benefits: RRIF, CRI …
- Your RRSPs except contributions paid in the last 12 months before you declared bankruptcy
- Your car & RVs (RV, snowmobile, motorcycle, ATV …) rented or financed as well as your cottage, land and house, if:
- Their selling price on the market is not higher than the total amount due (taxes and mortgages for residences and land)
- If your monthly payments are not late
What are the negative consequences of personal bankruptcy?
Declaring bankruptcy allows you to change your consumption habits and to draw a line on your past. But that will not be smooth.
You will see some of your assets being seized
Since you owe money to your creditors, the seizure and sale of some of your assets will be used to repay a portion of the amount owed to them. For example, if you have luxury items that are not essential, there is a high probability that they will be seized (unless they come from an inheritance).
You will have to fulfill certain obligations
Even if a trustee in bankruptcy makes you know the procedure and accompanies you throughout the process of your bankruptcy, it is recommended to familiarize yourself with the Bankruptcy and Insolvency Act (Act 178) in order to know the details. that could be useful to your file.
You will also need to be fully transparent with your trustee in bankruptcy regarding your financial situation. You will need to provide details:
- Of your assets
- The number of your debts
- Any change in your income
- From your address changes
You will have to trust your trustee in bankruptcy and establish frank and honest communication.
Your access to credit will be more difficult
During the whole process of your personal bankruptcy, you will obviously not have access to credit.
Afterward, you will have to prove to the financial institutions that you will contact that you now have control over your financial situation and that it can trust you.
- For 1 st bankruptcy, your credit rating will remain tainted for 6 years
- For 2 e bankruptcy, your bankruptcy will remain visible for 14 years.
During this time, do not hesitate to call a mortgage broker to help you find a lender who will agree to give you a mortgage.