Bankruptcy is often touted as one of the most reliable ways to get out of debt.
This is because it can eliminate all of your debts and still leave you with enough money and assets to rebuild your life.
While it might hurt your credit score, it can be repaired if you’re diligent about your spending and budgeting.
Applying for bankruptcy
The great news is that your application for bankruptcy cannot be denied.
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However, it’s not as simple as phoning up your bank and saying that you want to claim bankruptcy.
First, you’ll need to meet four qualifications:
- You need to owe at least $1,000.
- You need to be unable to pay your debts.
- You need to have stopped paying your debt.
- You need to owe more than what you own.
If you meet these four requirements then you can contact a trustee that will help you determine whether bankruptcy is ideal for your situation.
Most people discover that there are alternatives to bankruptcy, such as a consumer proposal or even debt consolidation.
However, when your financial situation is difficult and you have no other choice, bankruptcy is often the most reliable way to eliminate your debts.
The process of filing for bankruptcy is fairly straightforward.
Your trustee will guide you every step of the way and you only need to procure certain documents that act as proof of your financial situation.
Discharging from bankruptcy
When claiming bankruptcy it’s important to understand that your debt isn’t fully gone until you are discharged from your bankruptcy.
This is an important step that many people often overlook.
To be discharged, you have certain duties that must be performed.
This includes making required payments, attending a credit counselling session and also reporting your income.
If you fail any of these, then the licensed insolvency trustee may oppose your discharge.
A court hearing will then be required and they can make a court order that outlines the steps you need to take.
Until you do what the court states, you won’t be discharged from your bankruptcy.
If you leave this for too long, your trustee will close the file and you’ll no longer have bankruptcy protection.
Creditors may also object to your discharge if they have issues with your bankruptcy, but you’ll have a chance to present your side to counter any arguments that your creditors have against your discharge.
In short, filing for bankruptcy is a serious matter that must be taken slowly.
While effective in erasing your debt, there are responsibilities that you must take care of.
Make sure you speak to your trustee and ask any questions that you might have and express concerns where necessary.
If you’d like to learn more about applying for bankruptcy, don’t hesitate to contact us today to learn more about the process or speak to a specialist that can guide you further.
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