When to File For Bankruptcy

When to File For BankruptcyWhen to File For Bankruptcy is a very difficult decision for most people to make.

In my practice, I found that generally most people delayed too long before filing for bankruptcy. They hated the idea of filing bankruptcy for a variety of reasons. They felt it was an admission of failure or perhaps they have heard stories of what bankruptcy was like (invariably the stories were false) and feared declaring bankruptcy.

In my opinion a person should file for bankruptcy (or a consumer proposal) when he or she realizes there is no reasonable hope of paying their bills in a reason period of time

When to File For Bankruptcy

In my opinion, a person should file for bankruptcy (or a consumer proposal) when he or she realizes there is no reasonable hope of paying their bills in a reason period of time.

People often wait until things get so bad that bill collectors start calling, even at work or they are threatened with a wage garnishee.

Waiting too long to file, in addition to putting unnecessary stress on the person, often leads to fights with your spouse and the children being inflicted with an unhappy home life.

Licensed Insolvency Trustees have two major frustrations having to do with the decisions people make as to when to file for bankruptcy:

1. Trusting the wrong organizations. Many people feel that debt settlors or credit counsellors are the best people to help them deal with their debt problem.

Dealing with these organizations invariably leads to higher costs and often being given bad advice.

2. Believing what friends tell them about bankruptcy. I have had to dispel many false stories people have heard about bankruptcy.

More than 122,000 people filed bankruptcy or a consumer proposal last year (2015).

You can see all the Canadian Bankruptcy Myths at this link.

If you have any questions about this or other aspects of bankruptcy or consumer proposals you can set up a FREE consultation with our trustees, who are in every province and territory in Canada.

If you still have questions you can ask our licensed insolvency trustee your questions in confidence. Our bankruptcy blog also covers many topics on bankruptcy in Canada.