Why Delaying Your Bankruptcy Can Cost You More
Many Canadians are struggling with debt. Many of these people are facing sleepless nights and stress at home. Most know that they need to do something about their debt problem.
Unfortunately, many of these people delay seeking bankruptcy help or information on filing a consumer proposal.
People delay their bankruptcy (or proposal) because they are nervous about speaking with a Trustee.
They might have heard some of the myths about bankruptcy.
Most people have negative feelings about filing bankruptcy, which is usually because of common misconceptions about bankruptcy and insolvency.
It is not uncommon for people to wait months, or even years, to discuss their debt situation. All through this time, they are struggling to pay the minimum payments on their debt and often, getting deeper into debt.
In addition, interest costs means you are paying hundreds, or thousands of dollars, in additional charges each month.
Costs of Waiting to File Bankruptcy
Why does delaying bankruptcy cost more?
While the bankruptcy fee obviously does not increase if you wait to speak with a trustee, there are many other costs to waiting to file for bankruptcy or make a proposal.
The increased costs come from losing money to interest fees and other financial losses. Having no debt relief plan will cost you thousands of dollars.
The costs related to waiting to file bankruptcy could be:
- Wasted money in the form of interest charges. Most of your minimum payment goes to interest so if you are only making the minimum payment on your credit card debt your payment is not lowering your principal balance of your debt;
- Selling assets that would not be lost in a bankruptcy or proposal to service debt payments; and
- Wages being garnished.
Non-financial costs relating to waiting for seeking insolvency relief includes:
- Creditor calls and threats of wage garnishments;
- Threats of being sued for debt collection;
- Stress and worries in the family; and
- Sleepless nights.
These are the costs to answer the question of “Why Delaying Your Bankruptcy Can Cost You More”?
Impact on Credit Rating & Future Borrowing
Additionally, the longer you wait to start your bankruptcy or proposal the longer your credit will be impacted in a negative manner. Getting your bankruptcy discharge or completing your consumer proposal allows you to begin rebuilding your credit score.
The longer you wait to go bankrupt or make your proposal, the longer it will take to receive your discharge or complete your proposal. Having a poor credit score will also increase the cost to delaying your insolvency.
Your bankruptcy will be listed on your credit report for 6 or 7 years; however, it is possible for a recently discharged bankrupt to begin rebuilding their credit score right after receiving their discharge from bankruptcy.
You get a fresh start, and getting credit is part of this fresh start. Some people wait to go bankrupt to keep their credit cards. However, you can be out of bankruptcy in 9 months and you can get a fresh start.
If you are facing debt that you have been waiting to deal with, you can speak with one of our Trustees. You can set up a free, confidential consultation with a debt expert as soon as possible to avoid any additional costs.
Seeking assistance with your debt can be scary, but what is more scary is losing more money by delaying taking necessary action.
Money and time is valuable. Don’t delay any longer in taking charge of your debt and financial future.
Your money and your time are valuable. Don’t delay asking for help.