I have been meeting with people for many years – reviewing their situation, discussing the issues that have caused them to fall into a debt crisis, and looking at the options that will best suit their situation.
Sometimes people come in wanting to file a bankruptcy only to find out that a consumer proposal would better serve their situation. Other times people come in determined to file a consumer proposal, only to find out that a bankruptcy will be their only option. And quite often, the people I meet with just want me to help them out of debt, no matter the option.
In all of these situations, one of the comments I hear most often is, “I want to declare bankruptcy, but…”
Here are three of the most common endings to that sentence:
1. “I want to declare bankruptcy but, you will take my house (or vehicle, furniture, RRSP, TFSA).” The common misconception is that in a bankruptcy, you lose everything. If there is no equity in the asset that you think you will lose, normally the discussion revolves around whether you can afford to keep up with those payments, and what your life would be like without that mortgage or vehicle payment. There are so many options to deal with assets, that for many people, knowing they have the choice is enough to ensure that they are comfortable with filing bankruptcy. There are also federally regulated bankruptcy exemptions that outline what you keep in a bankruptcy.
2. “I want to declare bankruptcy, but it will affect my credit.” Less than half the people I meet with, have good credit by the time they come in for a consultation. Many people think that they have good credit because they are making their minimum payments, but what they don’t realize is that they have used credit to the limit on their credit cards and lines of credit, and that using all of that credit has already negatively affected their score. In fact, filing for bankruptcy or a consumer proposal can be the start of the process to repair your credit and get your finances back on track.
3. “I want to declare bankruptcy, but it will be in the newspaper and everyone will know I did it.” Yes, you do see bankruptcy notices in the newspaper, but if you look closely, you will see that it is companies and corporations that are made public. There are specific criteria to be met before a bankruptcy can be posted in the newspaper, and the majority of the time, our clients do not fit that criteria.
What are your concerns about filing a bankruptcy? Are you worried about the “but”?
Discussing your situation with a Licensed Insolvency Trustee will help to clear up any misconceptions, questions and issues that might be preventing you from dealing with your debt. Don’t let fear hold you back from the fresh start that you need and want.