We are going to examine some of the reasons why people file bankruptcy.
People from all walks of life file for bankruptcy. In my practice I have had lawyers, doctors, teachers, nurses, real estate agents, contractors, labourers and housewives file bankruptcy. Individuals usually assign themselves into bankruptcy in order to get a fresh financial start. Why people file bankruptcy depends on some of the following factors:
- More is owed than the assets and income can support.
- There are a large number of creditors, which makes it too difficult to attempt an informal proposal.
- Why people file bankruptcy: The debtor is having his or her salary garnisheed or attached by one or more creditors, is being harassed by creditors, or is being constantly examined or having other proceedings taken against him or her.
- Why people file bankruptcy: The debt cannot be paid off in any reasonable time.
Note that deceased persons and minors can also have themselves assigned into bankruptcy.
A deceased person’s estate might be placed into bankruptcy if there are not enough assets available to pay all the debt of the estate. The bankruptcy would allow the orderly payment of the creditors in the priorities established by the Bankruptcy and Insolvency Act.
A minor might file for bankruptcy if, for example, he got into a car accident and from that is responsible for damages he has no ability to pay.
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.
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