Many of the people who come to David Sklar & Associates for personal bankruptcy help come with a lot of questions. There is a lot at stake, and part of our job is to help you to understand exactly what you’re getting into when you declare bankruptcy. Here are 5 answers to common bankruptcy questions we hear from clients every day.
Going through bankruptcy is a difficult time in anyone’s life, but you’re not the first person to declare bankruptcy and you won’t be the last. According to Bankruptcy Canada, one in six Canadians will declare bankruptcy or file for a Consumer Proposal at some point in their lives, with as many as 150,000 Canadians going through insolvency every year.
Debt is reaching ever-higher levels among Canadians and for many, it simply becomes too much to handle.
It’s important to keep in mind that bankruptcy may not be your only option when you have debts you can’t repay. A Consumer Proposal can reorganize your debt, stop interest from accumulating, and give you an affordable way to pay back your debt.
Talk to the Licensed Insolvency Trustees at David Sklar & Associates, formerly known as bankruptcy trustees in Toronto, before it’s too late to consider a Consumer Proposal alternative.
Here are some facts about 6 of the most common questions we get about personal bankruptcy:
1. Will You Still Owe the CRA Money?
Tax debt can be a very worrying type of debt and many get into debt because they simply don’t understand their taxes. You can wind up owing money because your deductions are too low due to holding multiple jobs, because you misfiled your taxes or didn’t pay HST as a self-employed person, or from your personal income taxes.
The CRA typically looks favorably at Consumer Proposals, but if you declare bankruptcy, a Licensed Insolvency Trustee will have to file a pre-and post-bankruptcy tax return. If you still owe money on your post-bankruptcy tax return, you will still have to pay this amount.
2. What Happens to Your Foreign Property?
Foreign property is a difficult issue, and we suggest that you talk to us at David Sklar & Associates if you’re worried. We have your best interests in mind and you should always be forthcoming with your Licensed Insolvency Trustee.
3. Will You Be Discharged of Debt to Utilities in Ontario?
Yes; when you go bankrupt, you are discharged of unsecured debt, a.k.a., debt where the creditor has no rights to your assets (in contrast to a mortgage lender).
However, it could change your relationship with the utility provider – even if they are the only provider in your region, while they can’t refuse you service, they may demand payment up front in the future.
4. What Happens to Your Partner or Spouse When You Declare Bankruptcy Alone?
When you declare bankruptcy, your partner or spouse will not be directly affected. You are responsible for your own debts, unless you owe the debt together.
If you do have joint debt, your spouse will be affected – you do not owe half the debt individually. If you declare bankruptcy, your partner or spouse would become solely responsible, as a co-signer. Anyone with further questions is encouraged to talk to us at David Sklar & Associates.
5. Is Bankruptcy Different From Debt Consolidation?
When you are insolvent, it’s because you can’t keep up with unsecured debts, i.e., debts not explicitly connected to an asset like property or a vehicle.
Debt consolidation usually involves taking out a loan to pay off your unsecured debts by reducing the number of bill payments each month and to possibly reduce the interest rate, whereas bankruptcy discharges you from your unsecured debts.
Whatever your question about how personal bankruptcy services can benefit you, the process itself, or your assets, ask us. Your first consultation is free, so there is no reason not to thoroughly go over your options for insolvency.