Is it Possible to File Bankruptcy for Debts Not Due?

Bankruptcy and Future Debts

Bankruptcy, a legal process that can help individuals or businesses eliminate or repay a portion of their debts, is often seen as a last resort. But can you file for bankruptcy for debts that are not yet due? The answer may surprise you.

Understanding Bankruptcy

Before we delve into the details of filing bankruptcy for debts not due, it’s important to understand the fundamentals of bankruptcy. Bankruptcy is a legal status that can be declared by an individual or a company unable to repay their outstanding debts. It can provide a fresh start for those mired in debt, but it also comes with serious financial and credit consequences.

Types of Debt

Debt comes in many forms, and not all are immediately due for payment. Here are some types of debts that might be incurred:

  1. Contingent Debts: These are debts that might become due in the future, depending on a certain event or circumstance. For example, if you co-sign a loan, you might be liable for the debt if the primary borrower defaults.
  2. Unliquidated Debts: These are debts where the exact amount owed is not yet determined. For example, you might know you owe taxes, but the exact amount hasn’t been calculated yet.
  3. Future Debts: These are debts that are agreed to be paid in the future. An example might be a “buy now, pay later” agreement.
  4. Disputed Debts: These are debts where there is disagreement over whether the debt is valid or how much is owed.

Can You File for Bankruptcy for Debts Not Due?

The short answer is yes, it’s possible to file for bankruptcy for debts that are not yet due. However, the specifics can be complex, and it’s important to consult with a licensed insolvency trustee for advice tailored to your situation.

Bankruptcy and Contingent Debts

Contingent debts can be included in a bankruptcy filing, but whether or not they’ll be discharged (eliminated) depends on the specifics of the debt and the bankruptcy case.

Bankruptcy and Unliquidated Debts

Just like contingent debts, unliquidated debts can be included in a bankruptcy filing. However, the trustee will need to investigate the circumstances to determine if the claim can be included or not.

Bankruptcy and Future Debts

Future debts can also be included in a bankruptcy filing. If you file for bankruptcy before the debt is due, you might not be obligated to repay the debt.

Bankruptcy and Disputed Debts

Disputed debts can be a bit trickier in a bankruptcy case. The outcome will depend on whether or not the claim is upheld as legitimate.

What Debts are Not Discharged in Bankruptcy?

While many debts can be discharged in bankruptcy, there are some important exceptions. For example, fines and penalties imposed by a court, alimony and child support payments, and certain types of tax debts cannot be discharged in bankruptcy.

Similarly, secured debts – debts that are secured by an asset like a house or a car – generally cannot be discharged in bankruptcy. If you want to keep the asset, you’ll need to keep paying the debt.

Getting Help with Bankruptcy

If you’re considering bankruptcy, it’s important to speak with a licensed insolvency trustee. They can provide advice tailored to your situation and help you understand all your options.

For example, Dana MacRae Licensed Insolvency Trustee has been offering debt help in Ottawa and surrounding areas since 2000. They offer video conferencing and home consultations, in addition to in-person appointments.

Conclusion

Filing for bankruptcy is a serious decision that can have significant financial and credit implications. However, it can also provide a fresh start for those struggling with debt. While it’s possible to include debts not yet due in a bankruptcy filing, the specifics can be complex, and it’s always best to consult with a professional.

Remember, bankruptcy is just one option for dealing with debt. Other options might include credit counselling, a debt consolidation loan, or a consumer proposal. A licensed insolvency trustee can help you explore all these options and choose the one that’s right for you.

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