Are you struggling to find a way out of debt? You may be considering filing for personal Bankruptcy in Edmonton, to help give you a fresh start.
Filing for Bankruptcy is a legal process, designed to help you be free of your debts for a brighter future. When you file for or declare Bankruptcy, you’re entering into a legal process that protects you immediately from any further action, like debt collection calls from your creditors.
The only way you can file for Personal Bankruptcy in Edmonton is through a Licensed Insolvency Trustee (LIT). LITs are experts in all areas of debt support from credit counselling to Bankruptcy.
Before you decide whether declaring Bankruptcy is the best option for you and your financial situation, it’s best to speak with an LIT. They’ll guide you through your options and put together a plan of action to manage your debt and help you gain financial peace of mind.
What is Personal Bankruptcy?
Personal Bankruptcy in Edmonton and throughout Canada is a legal process governed by the Bankruptcy & Insolvency Act. Bankruptcy is an option that will help clear your debts when they feel impossible to manage. It’s important to remember that while Bankruptcy is one option, it isn’t the only way out of debt. You can discuss your unique situation with an LIT to help you make the right choice for your finances and wellbeing.
The only way to file for Bankruptcy in Canada is through a Licensed Insolvency Trustee, formerly known as a Bankruptcy Trustee. They are trained and licensed by the federal government to provide expert Bankruptcy services and advice. Not only do Trustees offer debt advice, they also deal with your creditors on your behalf to take some weight off your shoulders. Filing for Bankruptcy can feel overwhelming, so it’s important that you find an LIT who makes you feel comfortable and understood, to make the process feel as straightforward as possible.
When Should I Consider Filing for Bankruptcy?
Filing for Bankruptcy is usually considered a last resort for those who cannot afford to pay their debts. Here are circumstances where you may consider discussing Bankruptcy with your LIT:
- You’re fearful of answering the phone due to creditor calls
- You’re only paying minimum payments on credit cards
- You owe the Canada Revenue Agency (CRA) back taxes for multiple years
- You’ve been rejected several times for extended credit
- You’re using one credit card to pay another
- You’re repeatedly taking out cash advances or payday loans
- You’re skipping payments or are behind on accounts
If any of the above do apply to you, this doesn’t necessarily mean that you should file for Bankruptcy. Instead, talking through your situation with a Licensed Insolvency Trustee can help you to weigh up all options available.
Edmonton Bankruptcy Pros and Cons
If you’re considering filing for Bankruptcy in Edmonton, you’ll need to assess the pros and cons with your LIT. Here are some potential advantages and disadvantages of personal Bankruptcy to consider:
Pros of Bankruptcy
- Creditor calls will stop: When you file for Bankruptcy, you will receive an automatic stay of proceedings. This means that unsecured creditors must stop all collection actions, like calling you or sending out collection letters. This is a legal order that creditors must obey, which gives you creditor protection. Creditors won’t be able to contact you for debt collection, or take any legal action against you.
- Stops wage garnishments: Your Trustee will notify your employer, the court, and your creditors to stop any wage garnishment.
- Eliminates your debt: Once you’ve been discharged from Bankruptcy, you will be debt free. There are some exceptions to this, as while Bankruptcy eliminates most of your unsecured debts, there are some that can’t be discharged, such as student loans that are less than seven years old, court fines, penalties and child support.
Cons of Bankruptcy
- The cost: You’ll need to make Bankruptcy payments based on your income.
- Your credit score: Filing for Bankruptcy does affect your credit rating and will be reported as an R9 on your credit report. This rating will stay on your report for six years after you’ve been discharged for a first-time Bankruptcy. If you’re filing for Bankruptcy for the second time, this will be extended to 14 years.
- Loss of assets: It’s a common misconception that you’ll lose everything you own when filing for Bankruptcy, but this isn’t the case – there are many assets you can keep. If your home has equity over $10,000, that equity must be paid into your Bankruptcy, but there are options that can allow you to keep your house when you declare Bankruptcy.
- Duties: You will need to perform all duties explained to you by your Trustee for you to get discharged from your Bankruptcy. These duties may include reporting your monthly income, making payments, attending credit counselling sessions and providing income tax information. If you fail to perform all your duties, you won’t be discharged and your debts won’t be settled. It may be that you find this process an advantage, as you’ll learn skills on money management, so you feel confident managing debt and credit in the future.
Alternatives to Filing for Bankruptcy
Not sure if Bankruptcy is the right option for you and your financial situation? Your LIT will talk through your options with you to help you decide on the best path towards financial wellbeing. Here are some potential alternatives to Bankruptcy to consider:
A Consumer Proposal
Not everyone needs to file for Bankruptcy – sometimes filing a Consumer Proposal in Edmonton is a more suitable option to help you settle your debts.
A Consumer Proposal is a debt repayment option that allows you to reduce your debt. It’s a legal process between you and your creditors to help you repay a percentage of the debts you owe, at a lower interest rate for a period of time. Usually, you will make a monthly repayment over a period of time up to five years.
Consumer Proposals are governed by the Bankruptcy and Insolvency Act and can only be administered by a Licensed Insolvency Trustee.
Credit Counselling
Credit counselling involves you meeting with an LIT to discuss your financial situation. They’ll provide you with money management advice and actions to help you settle your debts.
From putting together a budget, to reviewing your credit report, you’ll put a plan together to help you manage your debt. Credit counselling isn’t just about money, but your emotional wellbeing too. LITs understand that debt problems can drastically affect your mental health, so talking through your concerns with a licensed professional can help take some weight off your shoulders and get you back on track.
Looking for Support With Your Debt?
It’s never too late to improve your finances and look forward to a fresh start. Our Licensed Insolvency Trustees are experts in debt management They are here to offer the support and advice to help you move towards financial wellbeing.
