No one ever plans on filing for bankruptcy, but it happens. Debt can catch up with you fast, and as hard as you struggle to pay it off, sometimes it’s not possible. Insolvency means that you do not have the income or the assets to settle your unsecured debts, including lines of credit, credit card bills, utilities, and other bank loans not attached to an asset. Filing for bankruptcy discharges you of that after you settle some of your assets and income to pay off your debts.
There is a stigma to declaring bankruptcy in Canada that the process doesn’t deserve. For the many people who go through insolvency every year, bankruptcy is a way to get their financial lives back in order. Bankruptcy is a tool that allows you to start over. Often, people wind up insolvent due to circumstances entirely out of their control. For their part, financial institutions often lend more money than they should. Some are resistant to bankruptcy because they worry about their credit rating, but if you’re facing insolvency already, your existing credit rating may not be worth fighting to keep. Sometimes starting again at zero is a better option. But how do you know when to declare bankruptcy and when to keep trying to pay it off on your own?
#1 You’re Struggling to Pay Bills
There are many reasons why you may be struggling to pay your bills. Some of the most common causes of bankruptcy in Canada are an unexpected loss of income or job loss, as well as illness. Having to take an extended, unpaid leave from your job because you’re ill can quickly cause you to go into debt. Other common reasons include losing your own business and separation, as you suddenly have to pay your household expenses individually.
#2 Your Debt Has Gone to Collections
If you’re getting calls from debt collectors, you’re being sued by debt collectors, or other legal actions have been taken against you, it’s time to talk to a bankruptcy trustee, now known as a Licensed Insolvency Trustee, such as David Sklar & Associates. Initiating bankruptcy proceedings will stop legal action from debt collectors. If you’re dealing with debt collectors, it’s time to learn about the bankruptcy process and how we can help.
#3 You’re Struggling to Pay Your Mortgage
When other financial obligations stretch your budget, you may struggle to pay your mortgage. Equity in your primary residence is exempt from bankruptcy proceedings if it is $10,000 or less. Debt relief through bankruptcy or a consumer proposal can help you get back on your feet and keep up your mortgage payments so that you don’t lose your home. Your home is one of your principal investments.
These are all major warning signs that you are possibly insolvent. You can get bankruptcy help in Ajax by visiting our office there, or any of our offices throughout the GTA. Bankruptcy trustees are here to help you get out of debt.
