Most people tend to share the same goals—we all want to have a happy and healthy life. It’s a pretty broad statement, and it’s dependent on a lot of factors, many of which can be out of your control. So, what happens when emergencies strike, the unexpected occurs, and suddenly you are left in financial peril? Not having enough money to make your bill payments is not only stressful, but it affects all aspects of your life. Try as you might, you just may not be able to dig your way out of debt and catch up, which may leave you in the only position financially possible—on the brink of declaring bankruptcy.
Whether you’re still questioning if bankruptcy is the right option for you, or if you’ve made the decision to go ahead with it, we’ll outline all the key steps you’ll need to take when filing bankruptcy here in Canada.
Why File Bankruptcy?
A good place to start is with taking a look at why it can be worth it to file bankruptcy in the first place. Obviously it has to benefit you, or else it’s not the best option. Bankruptcy will ensure that any collection agencies that are currently after you will stop, unsecured debt will often be wiped out, you no longer have to worry about your salary being garnished completely out of your control, and the best part is that it can feel like a real burden has been lifted from your life.
For many people, just the fact that the phone won’t be ringing with those collection agents and you won’t be getting final notices in the mail is enough of a reason to proceed.
Of course, with that said, it’s important that you look at all your options first to ensure that bankruptcy is indeed the best financial decision for you and your future.
It’s important to understand that declaring bankruptcy is in fact a legal process that is regulated by the country’s Bankruptcy and Insolvency Act; in other words, it should be taken very seriously. The goal is to discharge “an honest but unfortunate debtor” of their debts.
Make Sure You Have a Clear Picture of Your Current Debt
For those who have decided to go ahead with the bankruptcy process, the very first step is to get a clear picture of your current debt. You need to know exactly how much you owe, to who/what, and when it is due. There should be no guesswork here. Rather, it is a matter of going through all your bills and statements and making a clear and thorough list of what you owe.
Some of the items that can be discharged when you file for bankruptcy include overdrafts, lines of credit, credit cards, and income tax.
Do You Meet the Requirements?
There are also some requirements you’ll need to meet in order to declare bankruptcy. You must be unable to pay your debts as the bills come due, you must owe at least $1,000, and you must be insolvent (owe more than you own). If you don’t meet each of these requirements, you won’t be able to file for bankruptcy.
Meet with a Licensed Insolvency Trustee
The next step is to meet with a Licensed Insolvency Trustee i(formerly called a Bankruptcy Trustee). These are people who have a license from the federal government and are meant to assess all your options. They want to be sure that you do in fact qualify for bankruptcy. It is then the Licensed Insolvency Trustee who ends up filing an Assignment in Bankruptcy for a debtor. That means you will not make the final decision or file the paperwork.
It is also the job of the Trustee to fill in all the forms and to go ahead and file them with the Official Receiver.
Once your necessary paperwork has been filled out and filed, the next step will be the granting of a Stay of Proceedings. Essentially, this means that your unsecured creditors will no longer be able to take the legal steps to recover the debt. For example, a creditor can no longer garnish your wages. And, it doesn’t stop there; the Stay of Proceedings also means that the creditor must stop calling you and contacting you.
This step tends to offer a lot of stress relief to those in financial peril, as they know the constant phone calls and notices in the mail will finally stop.
During this time, there may be steps you need to take, which your trustee will discuss with you in advance.
Cancelling and Discharging All Debts
Now that you’ve completed your necessary steps, it is time to cancel and discharge all debts. This typically takes around nine months from the time you initially file your documents. It is important to know that the bankruptcy filing will be added to your credit report. It will stay on your report for at least six years from the date of your discharge.
During the six-year period after discharge, it’s important to focus on rebuilding your credit and creating a solid and stable financial portfolio. This isn’t something that happens overnight, but it will be essential to getting you back on your feet.
It’s important to note that even though that bankruptcy will show up on your credit report, it doesn’t mean it will be impossible for you to get credit. This is when speaking to a financial expert can help, as they can discuss how to rebuild and re-establish your credit.
No Need to Live in a State of Financial Stress and Uncertainty
Claiming bankruptcy isn’t something that anyone expects to do, nor do they tend to rush to it as an option. However, living your life as is, in constant debt, unable to pay your bills, sinking deeper into debt and constantly avoiding debt collector calls isn’t healthy. At some point, bankruptcy is the only viable solution. This is exactly why we invite you to contact us at Golding & Associates Licensed Insolvency Trustee so we can discuss your options and help you find a way out of your financial troubles.