What Should I Know About Debt?
If you are in dire financial straits as a result of debt, are you prepared with all the necessary information?
Do you know the necessary legal steps to handle matters?
Are you aware of all available methods of recourse?
Most Canadians aren’t fully informed about all their debt management choices.
To help the population better understand how to best approach debt management, we’ve broken down a list of the five key facts about debt you probably don’t know (but need to).
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Fact #1
Government Debt Is Eligible For Write-Off
When you owe money to the government resulting from loans, taxes, or owing GST and payroll taxes, it can be a challenging situation.
When the CRA is your creditor, you can feel very vulnerable to the debt itself.
It’s helpful to know that there are a couple approaches to managing government debts in Canada.
The first is by filing bankruptcy through a Licensed Insolvency Trustee.
This makes you eligible to rid yourself of this debt.
The second option is to file a Consumer Proposal as a way of negotiating your repayment.
It can drastically reduce the amount you must pay to clear yourself of debt.
Fact #2
You don’t have to pay your spouse’s debts
Despite the many households that think marriage makes you a party to your spouse’s debt it is actually not the case.
There are exceptions to this rule.
If you signed an agreement naming you as a responsible party for the debt, common in cases of co-signing, you are responsible for the payment of that debt in the event of their inability to do so.
Common shared debts include mortgages and car loans.
In many situations relating to either divorce or separation, you may become legally responsible for a share of the debt as a part of the settlement.
Fact #3
The majority of bankruptcy filings enable you to retain your assets
There is a threshold for the amount of assets a person is eligible to keep in the event of bankruptcy filings.
Generally, they accommodate retirement savings funds such as RRSPs (except contributions in the preceding 12 months).
You can usually keep your vehicle and furniture in your home.
Typically, you can hold on to both your home and vehicle.
Every situation is different, so for specifics speak to your Licensed Insolvency Trustee directly.
Fact #4
Bankruptcy doesn’t permanently damaged credit
The truth is that if you’ve never previously declared bankruptcy, your credit report is wiped of the filing after as little as six years from discharge.
Provided you take the proper measures to rebuild your credit, it should only take a period of two or three years to get your credit back on track.
With dedication, you can easily rebuild your credit to excellent standing in less than that amount of time.
Fact #5
Credit has little bearing on your financial wellbeing
In truth, your credit says little about your financial welfare.
Retaining all of the necessary details of your transaction history, it doesn’t track your cash flow or assets.
To get a full picture of finances, a high credit score is only part of the equation.
In order to keep financial health and restore your credit, speak to a skilled financial professional.
They can assist you in achieving your financial goals in a responsible manner.
