Filing bankruptcy can be a frightening ordeal, but it’s also good to know that you have choices. Here are some tips to help familiarize you with how the process works before you decide to go ahead and file, and some suggestions for how to find the best bankruptcy services if you do decide it is the right course of action for you.
1. Get over the stigma and know that you are not alone
The notion of filing for personal bankruptcy still makes many people very uncomfortable, they feel like they have failed to manage their finances properly and that they will be cast aside by society. Yet it is important to keep in mind that although some cases pf bankruptcy arise as a result of negligence, there are also plenty of people who find themselves in this situation due to unforeseen circumstances. A divorce, the death of a spouse, a severe illness or disability, the loss of a job can all propel even the most well-meaning of people into a precarious financial situation.
2. You won’t necessarily lose everything, there are protections in place
Of course, there is no point in sugar coating it, if you have a lot of assets, changes are that you will lose most of them if you file for bankruptcy. This is a natural outcome of the fact that creditors do have the right to recover at least part of their loss. That being said, the system is not designed to rob you of absolutely everything. Some assets are protected from liquidation in the bankruptcy process.
3. Protections vary depending on where you live
For example, creditors usually don’t have any access to locked-in pensions, RRSPs or RRIFs (although RRSP contributions made during the year prior to the bankruptcy filing must sometimes be added to the pot creditors have access to.) Each province and territory has its own list of assets that bankruptcy filers are allowed to hang on to. Here it is important to note that exemptions can vary dramatically, so you need to consult with a professional. In some provinces, a portion of home equity is exempt, whereas in others in must be included in the available asset pot to be divided among the creditors.
4. You won’t be debt free but your credit ration also won’t be ruined
It is important to remember that some debts cannot be absolved by filing for bankruptcy. They include secured debts like mortgages or car loans, alimony, spousal and child support obligations, court fines, claims arising from an assault, or student debts, unless you’re been out of school for at least seven years (this can be reduced to five years in cases of hardship).
That being said, it can still be the most responsible thing to do in the long term. Chances are that if you’re many months behind in paying your bills, collection agencies are calling and you’re not able to pay back anything close to what you owe, your credit rating will already be a disaster. For the record, in most provinces a bankruptcy notation remains on your credit report for six years after you’re discharged (which can occur in as little as nine months after filing).
5. Seek legal counsel and avoid amateur mistakes
All things considered, you should really seek the counsel of a professional legal or financial advisor before deciding to file for bankruptcy Brampton. Bankruptcy services will provide you with the peace of mind of knowing that the process is being carried out properly and that your best interests come first. You might even find that you can make certain sacrifices, so that you don’t have to go through a life changing ordeal. Regardless of the outcome, bankruptcy services will mind you that you are not alone and that you always have options moving forward.