When you realize that your debt problems aren’t going away, you may end up asking ‘Should I be filing for bankruptcy?’
Your creditors have handed your file to a collection agency. In which case you may have already received letters threatening legal action or wage garnishments.
Filing for bankruptcy will stop all of this, provide you a fresh start, and give you legal protection.
To file, you will require the services of a Licensed Insolvency Trustee (LIT). They are the only debt professionals who can take you through the process. Be sure to contact an LIT directly for this very reason.
A word of caution – be wary of anyone who is not an LIT. Many debt consultants may claim they can help you with your debt. However, they may end up taking a hefty upfront fee and then eventually bring you to a Trustee. You can save yourself the hassle and heartbreak by skipping any sort of ‘middleman’.
With the support of a Licensed Insolvency Trustee, filing for bankruptcy is a very straightforward process governed by the Bankruptcy and Insolvency Act. There are three main steps:
Step One: With the help of your Trustee, you will be able to check that filing for bankruptcy is really your best option. Quite often a Consumer Proposal can be a viable alternative.
To qualify for a personal bankruptcy in Canada you must:
- Owe at least $1,000 and
- Have debts greater than the sale value of your assets and
- Are unable to pay your debts when they are due.
Assuming that filing is the best step and that you qualify then…
Step Two: Your Trustee will gather information from you:
- Your full name, date of birth, and address
- Details of your Income
- A list of all your creditors
- A list of all your assets
The Trustee and their team will then prepare the paperwork necessary for filing. They will also go over the process with you again to confirm that you wish to proceed. If you do – then believe it or not – you are now ready to file.
Step Three: File for Bankruptcy – once you file, a number of things will happen:
- You receive legal protection from your creditors
- Collection agencies are no longer permitted to contact you
- Any wage garnishments will cease, with the exception of child or spousal support.
- Your Licensed Insolvency Trustee will deal with your creditors from then on
- Outstanding tax returns will be filed by your Trustee
During your bankruptcy you are required to:
- Provide monthly income statements and
- Attend two credit counseling sessions with your Trustee
…and that’s it – in all likelihood in nine months you will receive a ‘discharge’ from your bankruptcy.
One thing to bear in mind – filing bankruptcy will have reduced your credit rating to R9 which is the lowest rating possible.
The good news is that your Licensed Insolvency Trustee is able to advise you about ways to rebuilding your credit rating as quickly as possible.
So that’s it in a nutshell. However, there are two steps you need to seriously consider taking right now:
- Acknowledge there is a problem that needs addressed and
- Reach out to LCTaylor, your debt rescue
You can do that right now by requesting a free consultation with us – in complete confidence and with no obligation. What have you got to lose? Except perhaps your worries and a few sleepless nights.
If you are ready to take the next step and want to know the process for filing bankruptcy, contact one of our Licenced Insolvency Trustees at LCTaylor.