Effects of Filing Bankruptcy in Canada
What Effect Does Going Bankrupt Have?
Do you think that filing for bankruptcy might end up being the best solution for your debt?
If you do, then you should know that there are both positive and negative effects.
If you want to find out more about that then take a look below.
Pros and Cons
The most desirable benefit of filing for bankruptcy in Canada is that it gives you the chance to have a fresh financial start.
You will be able to eliminate debt and you will also be able to put an end to all of your collection calls too.
The one thing that you have to remember is that not every single debt that you have is going to be eliminated.
It’s vitally important that you know which of your debts are actually going to be absolved before you declare bankruptcy.
Bankruptcy is not without consequences.
The pros of claiming mean that your debts will be eliminated but you need to balance this against the cons.
Will you Lose Everything by Declaring Bankruptcy?
Bankruptcy gives you a fresh start.
You are able to keep your basic possessions and there are options available if you want to keep your other assets.
When you are bankrupt legally, the law requires you to surrender any assets you have to an insolvency trustee.
The assets will then be sold and the money that is obtained by that will then be distributed amongst your creditors.
Under Canadian law, there will be a list of items which are exempt from you going bankrupt.
This includes tools which you use to make a living, or your personal and household belongings.
What you Keep
Prior to filing bankruptcy, you will be asked to make a list of all of the items in your home.
You will then be able to assign a fair value to every item you have.
Most people are able to keep their assets in bankruptcy.
There are alternatives, such as a consumer proposal if you have a property which is valued above the exemption limit, but this must be realised by your trustee.
Will you Lose your Home?
This is a very complicated question as the answer will vary depending on your circumstances.
It will also vary depending on how much equity you have tied up in your home too.
The general answer is if you don’t have a huge amount of equity in your home then claiming bankruptcy will not affect your home.
In most cases, you won’t lose your car either.
The general rule is that only 1% of bankruptcies end up with you losing your car, as long as you keep up with the payments for it.
If you have any questions about declaring bankruptcy or if you need to know more about it in general, then you can find out everything you need to know by contacting Bankruptcy Canada.
We have a team of experts who would be more than happy to advise you on your specific situation so you can get the help you need.