If your debt repayments feel unmanageable, you may be wondering if filing for Bankruptcy would be the best way to get out of debt. Filing for personal Bankruptcy in Red Deer can be a way to say goodbye to debt and gain a fresh start, but it’s important to note that Bankruptcy isn’t your only option. There are several types of debt relief to help you gain the fresh start you deserve.
The only way you can file for personal Bankruptcy in Red Deer and throughout Canada is through a Licensed Insolvency Trustee (LIT). LITs are trained and licensed by the federal government to provide professional Bankruptcy and insolvency services. They are experts in all areas of debt services, from credit counselling to Bankruptcy.
Talking to an LIT can help you to decide if this is the right option for your personal situation. They can offer you non-judgemental support and put a plan of action together for you to manage your debt and improve your financial wellbeing.
What is Personal Bankruptcy?
Bankruptcy is a legal process in Red Deer and throughout Canada, governed by the Bankruptcy & Insolvency Act. It is designed to help those who cannot repay their debt, find financial relief. At the end of the Bankruptcy, the debt is legally discharged, meaning you are no longer liable to pay the debt back.
An LIT can assess your unique financial situation and together you can decide on the best route forward. They can offer you debt support and help you decide on the best option to relieve your debt. If you do choose to file for Bankruptcy, your Trustee will deal with your creditors on your behalf to take some pressure off you.
Pros and cons of Personal Bankruptcy in Red Deer, Alberta
Before you decide to file for Bankruptcy, you will need to assess whether it is the best form of debt-relief for your personal circumstances. Talking through the pros and cons with an experienced LIT can help you decide if Bankruptcy is the best route forward to clear your debt.
Here are some potential pros and cons of Personal Bankruptcy for you to consider:
Pros of Personal Bankruptcy
- Stop creditor calls: Once you’ve filed for Bankruptcy, you will receive an Automatic Stay of Proceedings, meaning your unsecured creditors must stop all collection actions. This includes calling you or sending out collection letters. Creditors must obey this legal order, which gives you creditor protection. They also won’t be able to contact you for debt collection or take any legal action against you.
- Eliminates your debt: Once you’ve been discharged from Bankruptcy, your debts will be eliminated and you will be starting fresh. But there are some exceptions to this, as there are some types of unsecured debt that can’t be discharged. These include student loans that are less than seven years old, court fines, penalties and child support.
- Stop wage garnishments: Your LIT will notify your employer, the court, and your creditors to stop any wage garnishment.
Cons of Personal Bankruptcy
- Loss of assets: It’s common to assume that you’ll lose everything you own when filing for Bankruptcy, but this isn’t the case. There are assets you can keep (varies by province) 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.
- Your credit score: Filing for Bankruptcy will affect your credit rating and will be reported as an R9 on your credit report. This will stay on your report for six years after you’ve been discharged for a first-time Bankruptcy. If this is your second time filing for Bankruptcy, this will be extended to 14 years.
- The cost: You will need to make Bankruptcy payments based on your income.
- Duties: The duties you need to perform for you to get discharged from your Bankruptcy will be explained to you by your LIT. 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.
Should I file for Personal Bankruptcy?
Usually seen as a last resort, Bankruptcy is a big decision to make so it’s important that you know it’s the right choice for you and your finances.
If you’re unsure whether Bankruptcy will suit your situation, here are some circumstances where you may consider filing:
- You’re afraid of answering the phone due to creditor calls
- You’re only able to make minimum payments on your credit cards
- You owe the Canada Revenue Agency (CRA) back taxes for multiple years
- You’ve been rejected for extended credit several times
- You’re using one credit card to pay another
- You’re taking out cash advances or payday loans repeatedly
- You’re skipping payments or are behind on accounts
However, if any of the above do apply to you, this doesn’t always mean you should file for Bankruptcy. Talking through your situation with an LIT can help you weigh up all your available options, and give you a professional opinion on the best form of debt relief for you.
Alternatives to Personal Bankruptcy in Red Deer
If you’re feeling hesitant or don’t feel it’s the right choice for you, there are alternatives you can consider. Talking through your options with an LIT can reassure you that you’re making the best decision for your financial situation.
There are potential alternatives to consider:
A Consumer Proposal
Filing a Consumer Proposal in Red Deer may work as a suitable alternative to Bankruptcy, to help you settle your debt.
A Consumer Proposal is a formal offer put forward to your creditors to settle outstanding debt. It can help you to repay a percentage of your debt at a lower interest rate for a period of time, no longer than five years. Like Bankruptcy, Consumer Proposals are governed by the Bankruptcy and Insolvency Act and can only be administered by an LIT.
If you’re mostly looking for better ways to manage your money, credit counselling may suit you. You’ll meet with an LIT to discuss your financial situation, and put together a budget to help you clear your debt manageably.
Credit counselling isn’t just about money, but your emotional wellbeing too. LITs are professionals in debt support, and understand that debt can drastically affect your mental wellbeing. So, talking through your concerns with a licensed professional can help to relieve some anxiety and prepare you for the future.
Need some support with your debt?
It’s never too late to take control of your finances and say goodbye to debt. Whether you choose to file for Bankruptcy in Red Deer, or you’re looking for an alternative option, Licensed Insolvency Trustees are experts you can trust. They are here to offer support and advice to help you move towards a brighter future.