Avoid Filing Bankruptcy in Canada

Bankruptcy represents a legal procedure handled by a Licensed Insolvency Trustee (LIT), which was formerly referred to as a licensed bankruptcy trustee. These individuals are licensed by the government and provide advice on how to Avoid Filing Bankruptcy in Canada. During their consultation, they explain the bankruptcy process, the debts you may still owe, the assets you may retain, the duration you will be considered bankrupt, and the different ways this decision might affect your lifestyle.

Avoid Filing Bankruptcy in CanadaThe Goal of Bankruptcy

The ultimate objective for those who declare bankruptcy is to obtain a “bankruptcy discharge” which is given after successfully completing the bankruptcy process. This discharge releases a debtor from most types of debt.

Six Reasons to Avoid Filing Bankruptcy

  1. Impact on Your Credit RatingFiling bankruptcy can severely damage your credit rating, often resulting in the lowest rating possible (a 9) for the duration of the bankruptcy period plus an additional six years following the bankruptcy discharge.
  2. Potential Loss of AssetsBankruptcy can lead to the loss of your assets. While exemptions exist on what assets can and cannot be seized during the bankruptcy process, non-exempt items must be surrendered to the LIT, who will sell them and distribute the funds to your creditors.
  3. Immigration DelaysWhile you are completing an undischarged bankruptcy, you cannot act as a sponsor to bring a family member or loved one into the country.
  4. Personal Loan DenialsIf you declare bankruptcy, you may not be able to obtain a mortgage or other personal loans while you’re in an undischarged bankruptcy.
  5. Business Loan DenialsIf you own a business, you may not be able to obtain business loans after filing bankruptcy proceedings.
  6. Potential Impact on CareerMany employers conduct credit checks before hiring. Having a bankruptcy on your record can be especially detrimental if you’re working in the banking, insurance, and real estate industries.

How to Avoid Filing Bankruptcy in Canada

There are several alternatives to consider before deciding to file for bankruptcy:

  1. Negotiate with CreditorsOne of the first steps to take is to reach out to your creditors and negotiate with them. They may be willing to settle for less than you owe if they know you’re considering bankruptcy.
  2. Liquidate Some AssetsSell some valuables and use the money to pay off your highest-interest debt.
  3. Get Help from Family or FriendsThis is a sensitive subject, but if done correctly, it is a better option than filing for bankruptcy.
  4. Pick up a Part-Time Job or Side GigFinding ways to earn extra cash can help you alleviate your debt.
  5. Consolidate Debt into Your MortgageIf your credit is in good standing, this could save you hundreds per month.
  6. Take out a Home Equity Line of Credit (HELOC)If you can obtain a low-interest HELOC, you may want to consider borrowing against your home.
  7. Dip into Retirement FundsIt’s worth speaking to a professional about borrowing from your retirement funds if it can significantly benefit your situation.
  8. Take out a Debt Consolidation LoanIf your credit is good, you may be able to get a debt consolidation loan to pay all your debts off.
  9. Enter a Debt Consolidation ProgramWorking with a certified Credit Counsellor from a non-profit credit counselling agency can help reduce or stop the interest on your debts.
  10. Consider a Consumer ProposalAnother form of insolvency are consumer proposals which involve paying your creditors a portion of what you owe, while avoiding some of the downsides of bankruptcy.

Get Debt Relief Today

At Bankruptcy Canada, we’ve counselled thousands of Canadians considering insolvency, and helped them Avoid Filing Bankruptcy in Canada simply through better money management and a little insider information. Contact us today to book a free and confidential counselling session and learn about your debt relief options!

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