There are plenty of false notions surrounding bankruptcy in Canada. We’ve identified the five most common myths and dispelled them in this video.
1. Family and friends will know that I have gone bankrupt
If you have filed for bankruptcy in Winnipeg, or anywhere else in Manitoba or Northwestern Ontario, this may be your first concern.
You don’t want people to know that you’ve filed for bankruptcy. That’s natural.
It’s true that each bankruptcy becomes part of the public record. However, the chances of anyone finding out about your bankruptcy are slim.
In most instances, the only people who will know are your Trustee and your creditors.
In other words, the process is discreet and you can go on living your life without anyone likely finding out about your bankruptcy.
2. When someone files for bankruptcy they lose all their possessions
Simply not true. There are laws within each province that ensure you get to keep some assets. Within certain dollar limits, this includes:
- Household goods
- Tools of the trade, which may include your car
- Registered Pensions and RRSP’s
- In most instances, your home
So you don’t lose it all.
You will also have taken a significant step toward getting your financial life back under control.
3. All your debts are erased in a bankruptcy
This is not true. Some debts are not erased, even in a personal bankruptcy.
Those that remain after you have filed include:
- Student loans if less than 7 years old
- Alimony and child support
- Fines and penalties imposed by a court
- Debts incurred by way of fraud or misrepresentation
Even though bankruptcy might not solve all your problems, it can be a huge step in the right direction.
4. My credit rating is damaged forever
While bankruptcy does have a negative effect on your credit rating – it is only a temporary phase. You can begin to rebuild your credit rating immediately.
If you are continuing with mortgage payments, that process of rebuilding is already underway as soon as you make your next payment.
You can also apply immediately for a prepaid credit card. Just remember, if you apply for credit over $1000, while bankrupt, you are required to let the lender know that you are currently bankrupt.
After your discharge from bankruptcy, you can apply for a regular credit card and do other things to aggressively re-establish a good credit rating again. Just remember to pay off the entire amount each month, instead of a minimum payment. You don’t want to end up with a new debt problem!
Continuing to struggle with unmanageable debt will eventually erode your credit rating anyway. Filing for bankruptcy gives you a fresh start.
And, in the long run, it may be one of the best ways to achieve a credit rating that you can sustain and that doesn’t keep you awake at night.
5. Licensed Insolvency Trustees (LITs) are only able to help with bankruptcies
This is a common myth associated with us, probably due to our professional title.
Simply put, Licensed Insolvency Trustees are the most highly trained debt professionals in Canada.
This means we have access to the widest array of potential solutions to help you with your problem debt.
Personal bankruptcy is only one of those solutions.
The Licensed Insolvency Trustees at LCTaylor can provide help with credit counselling, Consumer Proposals, advice and support about other, non-legislative solutions – a complete range of options not available through other types of debt counsellors.
We are licensed by the Canadian government to provide people, just like you, an opportunity to get a fresh start.
That fresh start can take many forms, but you can be assured that you will have received a full picture of all your options so that you can select the best option for your situation.
Filing for bankruptcy in Canada: Not your only option
So filing for bankruptcy in Winnipeg, and anywhere in Manitoba, or Northwestern Ontario is not your only option. You may have many other options of which you are not aware.
The best way to find out what your next step should be is to discuss your situation with a trained and licensed professional.
We are happy to meet with you for a free consultation, in complete confidence and with no obligation.
If you live in a remote community, telephone consultations can be arranged.
What have you got to lose – call today and speak to one of our Trustees.
Jillian Taylor-Mancusi, LIT
