When is it a Good Idea Not to File Bankruptcy?
At BankruptcyCanada.com we take great pride in helping people to find the right debt relief solutions for their unique needs and circumstances.
Over the years we’ve helped over 100,000 Canadians to find the right way to take control of their debts and make them more manageable so that they can live a debt-free life as soon as possible.
Some of our clients decide that Personal Bankruptcy is the best solution for them.
But there are many who find an alternative that better suits their needs.
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Bankruptcy can give your finances a much-needed fresh start, but it is not an arrangement that should be entered into lightly without consideration of the long-term consequences.
Let’s look at 10 reasons why filing for Bankruptcy may not be the best solution for you…
1- Bankruptcy comes at a cost
Many assume that filing for Bankruptcy is completely free.
However, the process is not without cost, as we explain in this article.
In the majority of cases, the cost of filing for Bankruptcy is a flat $1,800 which may be split into 9 instalments of $200.
However, it’s also important to consider “Surplus Income” payments which may be necessary if your average income exceeds the limit set by the Canadian government by $200 or more.
The specific amount will depend on the size of your family unit.
Your Licensed Insolvency Trustee will be able to tell you more.
2- You may have to refinance or sell your home
If you have less than $10,000 equity in your home, good news.
Your property is safe.
However, if your equity exceeds this figure, you will need to pay that equity to satisfy your creditors.
If you are unable to do this, you may have no choice but to refinance your home.
Or even sell it without seeing a penny of the profits.
Furthermore, a recent ruling in Ontario states that if your home increases in value during the period of the bankruptcy, you will be expected to pay the extra equity to the estate.
So, if you have a substantial stake in your property Bankruptcy may be the best option for you.
3- You may lose other non-exempt assets
Some assets are exempt from seizure by the Trustee.
These are known as “exempt assets”.
While they vary slightly by territory, they usually include your income, your retirement savings and most pensions.
However, there are many assets which are non-exempt including the last 12 months’ worth of contributions to your RRSP, not to mention other assets like vehicles, paintings, fine wines etc.
4- It will always be a matter of public record
When you are declared Bankrupt, it stays on your credit report for 6 years if it is your first Bankruptcy.
Subsequent Bankruptcies will remain on your credit report for 15 years.
However, it’s important to remember that any bankruptcy remains a matter of public record, and can never be expunged.
5- It may harm your future job prospects
The ambitious and career-driven may want to think twice before considering bankruptcy.
Some employers carry out credit checks of applicants.
Some may consider the credit rating of an applicant an indicator of their character and reliability.
While you may consider this unfair and an inaccurate assessment of your ability to do a job, it is nonetheless the employer’s prerogative.
6- You may face discharge issues
When filing for bankruptcy, a Licensed Insolvency Trustee will work with you in the crucial first 9 months to ensure that you honour your commitments and get an “automatic discharge”.
However, your creditors may issue an opposition to discharge which could result in your Bankruptcy going to court.
This may significantly add to the cost and complication involved.
7- You can’t be bonded when you’ve been made bankrupt
A surety bond is a way for businesses to demonstrate to their clientele that they are trustworthy.
As such, some employers will expect employees and prospective employees to be bonded.
However, you cannot be bonded if you have been made bankrupt and this may preclude you from some jobs and career opportunities.
8- You may not want to live with the stigma
While there’s no failure in Bankruptcy, some people believe that there is a stigma attached to Bankruptcy that they may find difficult to live down.
Unfortunately, nobody can make peace with it for them.
9- It can make your future feel even more uncertain
The future is a scary prospect for many of us, and Bankruptcy can add an unwelcome extra element of uncertainty.
Especially if the value if your property or other assets rises while you’re going through the process.
You may find yourself hoping that you don’t get a run of good luck.
10- You have other options that may suit you better
By no means is Bankruptcy your only option if you become insolvent.
There are a wealth of other options to explore which may help you to take control of your debts, and even write off a significant portion of them.
For instance, a Consumer Proposal can offer you many of the same benefits of Bankruptcy but without as many far reaching consequences.
You can see how a Consumer Proposal compares to Bankruptcy here.
We’re here to help
Don’t let our name fool you.
We’re not here to try and force bankruptcy on you as a solution.
We’re here to help you take stock of your available options and find the right debt relief option for your needs.
We’d love to tell you more!
Call us today on (877)879-4770 for a risk-free, zero-obligation and 100% confidential callback.
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