I Need Money to Run My Household – Can I Go Bankrupt?

Bankruptcy has a slew of myths and fears that go along with it.

Many of these fears can be assuaged just by understanding the reality of bankruptcy and clearing up some of these myths.

If you’re in a position where you can no longer pay your bills, pay your mortgage, or settle your credit cards, you may need to consider that bankruptcy is not always the worst choice.

If you have questions on how to continue living “normally” after bankrupt, there are answers!

Yes, there are some legal fees to file for bankruptcy, but they are minimal.

Need Help Reviewing Your Financial Situation?
Contact a Licensed Trustee for a Free Debt Relief Evaluation

Call 877-879-4770


If you’re having trouble paying for essentials because you’re continually trying to pay down debt without enough income, the following points may be clarifying for you to know whether filing for bankruptcy could be beneficial.

You might be thinking, “I just can’t afford to claim bankruptcy,” but the alternative of not being able to pay any of your debts is hardly any better.

  • Not all your assets will be removed.

The common misconception about a bankruptcy is once you begin filing a claim, movers come in and take every item you own, shoving clothes and furniture into boxes and away in a moving van.

This is false on several levels.

First, claiming bankruptcy takes months.

On average, your bankruptcy will take no less than nine months time, and approximately 21 months if you have what is deemed “surplus income.”

During that time, your Licensed Insolvency Trustee will go over your financial situation, including counting every asset you own outright, as well as things you owe on.

So, no, a moving truck is not going to arrive at your doorstep as soon as you meet with a financial advisor.

Secondly, you can actually keep a substantial amount of your assets, depending on the items and the province in which you live.

For example, most of Canada will allow you to keep a car that is worth less than $5,650 if you do not owe any money on it.

While provincial law varies, you will be able to keep some or all of your clothing, kitchen essentials, tools that provide you a job with income, and even limited furniture.

There are exemptions when you claim bankruptcy to help you lead a relatively normal, but reduced, lifestyle.

The goal of a bankruptcy is not to throw the individual on the street.

  • You can finally breathe easy

Struggling with debt doesn’t happen overnight.

You’ve likely been trying to make minimum payments on credit cards, pinch every penny to put towards your mortgage, and reduce costs wherever you can for some time.

The sheer amount of stress associated with debt can lead to substantial health problems.

When you file for bankruptcy, you will owe less, and be required to make fewer payments.

As soon as you begin the bankruptcy claim, a Stay of Proceedings will be filed.

All creditors will stop calling, no more nasty letters will show up in your mail, and you will no longer be making payments on any of your debt.

Stress is no joke.

The moment your phone stops ringing from creditors, you’ll be able to relax a little, and your mental and physical health will be improved.

With a clear plan in place created by your trustee, you’ll be able to reduce your stress and breath a little easier.

  • Your debts will be erased

When you are officially released from bankruptcy, the associated debts are erased.

It’s as simple as that.

As mentioned earlier, it can take anywhere from nine to 21 months to be fully released from a bankruptcy, but at this point, you will no longer owe any of your debts that are associated with your bankruptcy.

When you file for bankruptcy, your wages can not be garnished at this point, so while you may fall into the surplus income category, you are in a better scenario since garnishments can be incredibly impactful.

If you are living beyond your means, you may be struggling with all kinds of bills you are unable to pay.

When you are forced to budget with a credit counselor, you will learn how to live within your means, and your debts will no longer be owed.

This is the most advantageous aspect of a bankruptcy and the main reason that you may need to file with a Licensed Insolvency Trustee.

Is bankruptcy right for you?

If you’re considering filing for bankruptcy, the first thing you will need to do is make sure the reason you are financially insolvent is because you are unable to pay back loans and creditors, not because you simply are not receiving any income.

Secondly, you will need to make an appointment with a credit expert or licensed trustee to go over your financial situation.

Many times, there are debt consolidation options that are less impactful on your living situation.

Other options include consumer proposals in which your debts are consolidated to one sum, and your trustee works with your creditors to find a middle ground in which you pay back your debts at a slower pace or at a reduced amount, free of interest.

Living within your means may help you get to a place where you can slowly pay back your debt, and build your credit back in a financially healthy way.

If you’re struggling with the need to claim bankruptcy, contact us at Bankruptcy Canada today.

The Do-Nothing plan is not a solid way to address your debt.

Our licensed insolvency trustees and credit counselors can help guide you through the murky waters of debt, credit, consumer proposals, setting up a budget, and filing for bankruptcy.

Instead of thinking you can’t afford to file for bankruptcy, you may not be able to afford not to.

You may have more alternatives that you have considered, so give us a call today for a free no-obligation consultation.

Your life does not have to be ruined just because you are in severe debt.

We can help sort things out.

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

Leave a comment

Your email address will not be published. Required fields are marked *