If You Don’t Need To Go Bankrupt, I’ll Tell You

You may reach out for help and want to know your options when you have more debt than what you can handle or reasonably manage.

You likely want to know if bankruptcy is the right solution to your problem.

You may be surprised to know that in most cases you’ll hear the answer no.

It’s because instead, you’ll hear recommendations to explore other debt relief solutions versus assuming bankruptcy is the only way to go.

A trustees’ code of ethics will make them tell you if bankruptcy is not required.

You will never have to worry about having the experts at Bankruptcy Canada sell you a service you don’t need.

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Reasons to Avoid Bankruptcy

Your trustee should take a closer look at your individual situation versus making assumptions or trying to fit you into a category that you don’t fit into.

The motto that all financial companies should live by is that, If You Don’t Need to Go Bankrupt, I’ll Tell You.

While you may walk into a meeting assuming that bankruptcy is your only option, your trustee should be wise and honest enough to advise against it and tell you the reasons why if they don’t honestly believe it’s the correct solution for you.

Take, for example, a man in his late sixties with no assets.

In this case, his only source of income is from a pension.

It’s nearly impossible for a creditor to garnishee a pension, even if the client were to stop paying off these debts.

It might be a different situation and course of action if this person was still working and bringing in wages.

Wagers are mostly easy to garnishee, so then bankruptcy may have been a good choice as a way to stop a wage garnishment.

Additional Reasons You Don’t Need to Go Bankrupt

Not only that but let’s say this person is single.

It’s important to note that in a bankruptcy, a single person is allowed to have an income of about 2,000 dollars per month.

If your earnings are more than that you pay a penalty of half of the amount you are over the limit, and your bankruptcy is extended for an additional year.

You can hop online to learn more about Bankruptcy in Canada and surplus income, so you know exactly what this all means.

You need to take the total amount of the pension and CPP to see how far over the limit this person is.

For this example, the surplus income payments would be about 500 dollars per month since he’s 1,000 dollars over the limit.

Amount of Bankruptcies

You can safely say that a typical first bankruptcy where there’s no surplus income will last for at least nine months.

However, for this example, it’s the person’s second time filing for a bankruptcy, so this time it’s going to last a minimum of 24 months.

Furthermore, because of the surplus income that’s taken into account, an extra year will be added, and the bankruptcy will actually last for about 36 months.

At a minimum of 500 dollars per month for 36 months, this person would be paying 18,000 dollars in surplus income payments and would lose their tax refund.

The takeaway is that paying 18,000 dollars over three years to get rid of 15,000 in debts is not an ideal option.

Exploring Other Possibilities

There are other ways for this person to pay down debt and avoid bankruptcy that should be taken into consideration.

For example:


  1. Stop paying, open a new bank account at a new bank, and just put up with the phone calls. It’s a stressful option, but inexpensive since there are no payments.
  2. The person could do a debt settlement, where they offer to make payments over time.This might work if you can get all creditors to agree.
  3. The person could do a debt management plan through a not-for-profit credit counsellor.You would pay back the full 15,000 dollars but would get a break on the interest.
  4. The person could do a consumer proposal, where you negotiate the settlement with the creditors, and it becomes legally binding.


While all good and reasonable options, there is a downside.

With all three choices, there will be a note put on your credit report, which states that you pursued this particular option.

Another Course of Action

Another way to avoid bankruptcy in this situation is to downsize.

You can move to a smaller, less expensive apartment to free up some more cash.

Then you can use the money you can save each month to pay off the debts on your own.

If you pick up another job or side gig and bring in even more income, then you’ll probably be able to pay off all your debts by yourself in just over a year.

When looking at the big picture, it’s certainly a better path than choosing a three-year bankruptcy.

How to Make the Right Choice

The right decision is one that you feel most comfortable with at the end of the day.

It’s the right choice when you’re confident that it’s what you can handle and won’t cause you any additional stress and strain.

If you truly don’t want to go bankrupt, then you should be able to work with an expert to get some guidance about alternatives to paying down debt that will be a suitable course of action.

Why Work with Us

At Bankruptcy Canada, we treat everyone fairly and equally and will actively listen to your situation so that we understand where you’re coming from.

We’ll never offer a one-size-fits-all approach or solution.

We don’t withhold or keep information to ourselves that we know will be vital to you making a wise decision.

We will go over all your options with you in detail.

Together, we’ll sort through your finances and dive deeper into various ways you can pay down debt and help you come up with a reasonable budget.

If you’re ready to make a positive change and find financial freedom, then we encourage you to get in touch with us today.

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?

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