In 2019 alone, there were almost 129,000 insolvency cases filed with the Office of the Superintendent of Bankruptcy (OSB).
That number was an increase from the year before.
Now, thanks to the impact of the COVID-19 pandemic, even more Canadians are expected to file for bankruptcy.
In fact, more than a million Canadians believe they are on the verge of bankruptcy thanks to their current financial state.
When you work with a Licensed Insolvency Trustee, bankruptcy is usually a last resort.
But, it does happen and it can be hard to get back on your feet without the right knowledge.
Thankfully, it’s not impossible.
Keep these tip tips in mind to get your life back on track after bankruptcy, and take charge of your own financial situation.
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1. Build a Better Budget
If you’ve never created a budget before, now is the time to put one together!
Learning how to budget is as simple as understanding how much money you’re bringing in every month and where that money is going.
Write down a list of your monthly expenses and subtract that from everything you’re bringing it.
It will give you a clear picture of where you may need to cut back or redistribute your earnings.
2. Set Goals
Having a budget is only useful if you actually stick to it.
So, set financial goals for yourself.
Maybe you want to open a savings account and be able to put $5,000 in it.
Maybe you want to buy a house or a car in the future.
By setting goals for yourself, you’ll be more likely to stick with your budget and stop overspending.
3. Use Cash Whenever Possible
There are some things that you can set up to pull money directly from your bank account, like your mortgage and monthly utility bills.
But, for “everyday expenses,” consider using cash instead of credit cards.
Cash is straightforward and limits you from overspending while a credit card makes that easy to do.
Next time you go to the grocery store or out to a restaurant, carry cash with you instead of a card.
It’s much easier to stick to your budget when you don’t have a card at your disposal.
4. Pay Your Bills On Time
You can probably get away with not making a payment or two on your monthly bills – especially utilities.
Don’t assume that just because these companies don’t report you right away means they won’t.
Plus, by not paying your bills one month, the amount you owe just keeps adding up.
Keep yourself out of danger and out of deeper debt by making a commitment to paying your bills on time.
As stated above, you can often set up automatic payments directly from your bank account for some monthly expenses.
Doing so will help you to stay on track without having to think about it.
5. Check Your Credit Report
One of the best things you can do to stay on track with your finances after bankruptcy is to consistently check your credit report.
It’s important to make sure that all of the information being reported is accurate.
By checking your report, you can make sure that your credit score is where you think it should be and reflects the efforts you’re making to get back on track.
6. Put a Deposit Down on a Secured Credit Card
A secured credit card is a card that’s backed by a cash deposit.
That deposit gives you a bit of a cushion if you can’t make payments on the card.
That doesn’t mean the card is “prepaid” or that you should use it assuming you have that money to spend.
It’s a way to keep yourself safe if you have to use a credit card and can’t make the payments.
7. Don’t Finance Your Purchases
Though you might be tempted to purchase a car or other major items by financing, it’s easy to get caught up in a financial trap that way.
Financing can be a great option if there is no interest involved.
But, if the interest rates are ridiculously high, you’ll have a very hard time digging yourself out from underneath those payments.
It’s better to save up for major purchases and pay cash whenever possible.
8. Invest Into Tax-Free Savings Accounts and RRSPs
You can show your bank that you have a dedication to your finances by investing in tax-free savings accounts or Registered Retirement Savings Plans.
As a bonus, by investing in accounts like these, you could end up getting larger tax refunds.
That money can be used to make larger purchases in the future or go back into savings.
9. Don’t Fall for Scams
Far too often, scammers will try to take advantage of you online by offering free credit repair services.
While they can look convincing, these scams are dangerous and could put you in serious hot water with your finances.
Always talk to a Licensed Insolvency Trustee or financial advisor when it comes to your credit instead of clicking on a flashy ad online.
10. Educate Yourself and Others
While going through bankruptcy is far from a pleasant experience, it can certainly be a learning experience.
Educate yourself on how to handle your finances, and don’t be afraid to talk to people in your life (especially your children as they get older) about how important it is to manage their money, and everything bankruptcy involves.
Remember, you’re not alone if you’ve gone through bankruptcy, and there is no shame in getting the help you need to get back on track.
Keep these tips in mind to stay on that track and find financial security for the rest of your life.
How to File for Bankruptcy
What is Bankruptcy?
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?