You know that you’re caught in a cycle of debt when your debt keeps growing and you keep borrowing, sometimes just to make payments. Rising debt can elevate your stress levels and become impossible to fix. It can happen to anyone regardless of their situation and it’s incredibly difficult to get out. The Bank of Canada has raised interest five times since mid-2017 leading to more Canadians facing debt that seems impossible to overcome.
Bankruptcy
Generally speaking, bankruptcy doesn’t have a good reputation. We don’t discuss bankruptcy while out with friends because it has some scary, ominous associations. When debt starts to control your life, you have to take action. While it may sound scary to the uninformed, bankruptcy is a form of debt relief that can take you from the cycle of debt to a path towards financial stability and long-term planning.
The legal process of bankruptcy is meant to financially rehabilitate someone in serious debt rather than punish them. Through a Licensed Insolvency Trustee (formerly known as bankruptcy trustee), individuals can file for bankruptcy and get clarity on the whole process. Click this link here for 5 facts you need to know before filing for bankruptcy and begin to understand just some of the misconceptions around the process.
At a time when overwhelming debt is the new norm in Canada, you deserve to get help from a trustee in bankruptcy in Toronto at David Sklar & Associates. Many misconceptions about bankruptcy come from the amount of media we Canadians consume from our American neighbours —Canadian bankruptcy law is very different from American law.
It’s time to put aside the inaccurate representations of bankruptcy and clear the air. Below are some of the most common myths and misconceptions about bankruptcy in Canada.
You’ll Lose Your Home
Unsecured creditors may be entitled to some equity in your home above and beyond exemption limits. Very few people actually lose their homes these days, but if there is non-exempt equity in your home at the time of filing, you will make a settlement payable to the estate through your bankruptcy trustee.
You’ll Lose “Everything”
This is what it might feel like when you finally admit that it’s time to throw in the towel and file for bankruptcy, but it’s not accurate that you’ll lose all of your belongings. With the exception of items of extraordinary value like fine art that you have to declare on your Statement of Affairs, your personal effects are exempt in bankruptcy.
You Can’t Get Future Credit
Bankruptcy is meant to rehabilitate the debtor and in that spirit, it isn’t fair to keep someone who has filed for bankruptcy from, say, getting a mortgage. The record of your bankruptcy will stay on your credit report for six years after you are discharged but then it’s gone.
You’ll Hurt Your Spouse’s Credit
If you file for bankruptcy, you do not affect another person’s credit. It’s that simple. If you share debts with your partner and they don’t file for bankruptcy, they are still liable for those debts, but not yours.
