_{By Bromwich+Smith Staff | 755 words | Reading Time: 4 minutes and 45seconds | Date: 2022/08/25}

We often shy away from talking about finances. When we are struggling to make ends meet or are overwhelmed by debt, we don’t know who to turn to. Knowing your options- and that there are options will be the first step to conquer debt effectively. 

Filing for personal bankruptcy starts with understanding that you have a debt problem. Debt can come on for a variety of reasons, job loss, change in marital status, personal injury, or many other reasons. What are the signs that your debt load is too much, and you may need to consider debt relief options?

• Your credit cards are always at their limit. You may or may not be able to make minimum payments.
• You are paying bills with your credit cards.
• You are using cash advances or payday loans.
• You find difficulty making one or more bill payments each month.  You may be able to make some payments, but the debt is persisting/increasing.
• You have received letters or phone calls from creditors threatening legal action unless you pay money owed.
• Loss of income in the household means there is no money to pay the debts.
• You are overwhelmed and stressed about your finances, and it is affecting your personal relationships.
• You have reached your borrowing limit and your bank will not provide any further financial assistance.

While every bankruptcy is different, there are consistent signs that you need to seek help with your finances. If any of the above sound familiar, declaring personal bankruptcy may be the right choice.

Bankruptcy is only one of the debt-relief solutions than bankruptcy available for people who are struggling financially. Ultimately, it will come down to what your circumstances are to determine what solution is best for you. 

Connecting with a Licensed Insolvency Trustee (LIT) immediately can support you in getting sound advice to determine solutions that support your needs. 

Do I Qualify for Bankruptcy?

In Canada you may qualify for bankruptcy if you are an insolvent person which means you: 

• owe at least $1,000 in unsecured debt,
• are unable to pay your debts as they come due or,
• you owe more in debts than the value of the assets you own, and,
• you must either reside, do business, or have property in Canada.

What happens when I file for Bankruptcy?

It is important to know that not all debts qualify for bankruptcy. Debts that can’t be wiped out are unsecured debts that include student loans that are less than seven years old, court fines, penalties, and child support.

Debts that can be wiped out in bankruptcy include credit card debt, personal loans, lawsuit judgments and obligations from leases or contracts. 

When you file for bankruptcy, you receive an automatic stay of proceedings, which is a legal order that creditors need to abide by. This order gives you immediate creditor protection and it is a unique feature only available through a Licensed Insolvency Trustee.  Creditors will no longer be able to contact you for collection of debt or take any legal action against you. 

Bankruptcy also stops wage garnishments. When you claim bankruptcy, your Trustee will notify your employer, the court, and the creditor to stop the wage garnishment. An exception is that bankruptcy cannot stop the garnishment of your wages by the Family Responsibility Office.

Once you are discharged from bankruptcy, with a few exceptions, you are debt free. 

 What is the impact of Bankruptcy? 

Bankruptcy can have quite a few impacts and we want to make sure that you understand what these could look like. 

Once you file for bankruptcy it will be reported as an R9 on your credit report for six years and a second bankruptcy can extend this to fourteen years. You may think that you will lose everything in a bankruptcy. We are here to tell you that you can keep many of your assets through bankruptcy. Some non-exempt assets include RESPs and any contributions you made to your RRSP in the last 12 months. To see the standard exemptions for each province and territory in Canada, click here. 

We understand that your house is likely your most valued possession. There are exemptions that allow you to keep some of the equity in your home when you file for bankruptcy. However, if you’ve already paid off a large portion of your filing for bankruptcy might not be the best solution for you as the law requires you to use that equity to pay off some of the money you owe to your creditors.

What Will A Bankruptcy Cost me?

There are fees to file a bankruptcy. These fees are set by the Office of the Superintendent of Bankruptcy and are also based on your income. The office of the superintendent of bankruptcy sets thresholds that determine the various income levels and required payments. Rest assured that your Licensed Insolvency Trustee will work with you on these payments.

Is Bankruptcy the right choice?

We know making a financial debt relief decision can be intimidating. There are other several options available including:

• Debt relief Counselling
• A Consumer Proposal  
• Negotiating the terms of your debt with your creditors on your own. You may be able to discuss paying less interest, but will likely still be liable for the full debt.  
• Filing for Bankruptcy.

You may want to check out our related bankruptcy blog on the pros and cons of bankruptcy or complete guide on bankruptcy to ensure you have all the information you need for your first meeting as well.

At Bromwich+Smith, we have a thoughtful, knowledgeable, and helpful team that is here to support and create a fresh start for you. Before recommending bankruptcy, all other debt relief options will be explored (including debt consolidation, debt forgiveness, consumer proposals, and credit counseling). In some debt situations, personal bankruptcy is the best solution. The good news is that working with our compassionate and knowledgeable Debt Relief Specialists will enable you to be debt-free in as little as 9 months.

For that reason, it is important to seek help as soon as possible from a credible source. We offer an initial free, no obligation, confidential consultation by phone 1.855.884.9243 or live chat. You can also request a call back at our contact us page. Our team of Debt Relief Specialists are here to assist you with unbiased and nonjudgmental support, ensuring you find the right solution that will help you conquer your debt and rebuild your worth today.