Could Bankruptcy Be the Right Solution for You?
If you’re reading this post, it’s likely because you have come to realize that you have significant or growing debt that you’re unable to deal with on your own.
Acknowledging your current situation and seeking education and assistance is the very best thing you can do to improve your circumstances.
For most debtors, the main challenge lies in finding the right solution for their particular situation. For many, the best solution is Bankruptcy. It gives them the fastest way to recover financially and get back to building their future. Follow these steps on how to file for Bankruptcy in Manitoba.
What is Bankruptcy?
Bankruptcy is a process by which honest, hard-working Canadian debtors like yourself may obtain relief from the financial pressures of overwhelming debt. The actual filing of Bankruptcy in Manitoba is a relatively simple process.
We’ll discuss the steps on how to file for Bankruptcy in Manitoba more thoroughly below. But before we get ahead of ourselves, it is important to determine if Bankruptcy is the right option for your situation.
Advantages of Filing Bankruptcy in Manitoba
- Bankruptcy can improve your financial situation almost immediately upon filing. That’s because, in Canada, Bankruptcy is a legal process that protects you from your creditors. When you file for Bankruptcy, an automatic Stay of Proceedings goes into place. This prevents your creditors from being able to contact you directly to recover the debts you owe. No more collection calls, wage garnishments, frozen bank accounts, or lawsuits.
- You will be able to save for your post-bankruptcy future. Any payments you will be required to make during the Bankruptcy are based on government guidelines, which set out what income is needed for a family of your size. Thus, if you have income beyond what the guidelines indicate is required, you will be able to save 50% of that income, and pay only the remaining half to your Trustee for the benefit of your creditors.
- A Bankruptcy is typically a quicker and less expensive solution than a Consumer Proposal, or a consolidation loan. In many situations, this is an important factor, particularly in instances where your income is not secure long-term — let’s say a term position, or new job, or where you are planning on major personal changes, such as an increase in your family size.
- Once you are discharged from your Bankruptcy, typically in nine months, if it’s your first Bankruptcy, your unsecured debt will be extinguished — your credit card balances, unsecured personal loans, unpaid bills, payday loans and tax debt, with limited exceptions. What this really means is that you’ll be able to start on the journey to rebuilding your credit within a relatively short time.
- While the Bankruptcy discharges only unsecured debt, it does allow you to examine any secured debt you have and to decide whether you can afford to continue with that debt. For example, if you owe far more on your car than it is worth, you may decide to give up the car to the secured creditor and look for a cheaper solution to transportation. The outstanding amount owing on the car after the creditor sells it would be discharged along with your other unsecured debts. This is also true of a mortgage that you do not wish to continue for any reason.
- You will receive two Financial Counselling sessions during the Bankruptcy. These will help you to build your financial management skills and identify ways to make your financial future more secure.
Other Factors to Consider Before Filing for Bankruptcy
- Some debts, such as child support and alimony, fines and penalties of the court, student loans that are less than 7 years old, and debt that is the result of fraud or misrepresentation, will not be discharged in Bankruptcy.
- A Bankruptcy will show up on your credit report for up to six years after discharge, which might make it more difficult for you to obtain a loan. However, if you have continued payments on a mortgage or car loan during the Bankruptcy, you will have already begun the process of rebuilding your credit. There are also secured credit cards that can help an individual rebuild their credit record. (Keep in mind that if you’re at the point of having to consider Bankruptcy as a viable option to deal with your debt, your credit rating is likely already quite poor. Even missed payments have a detrimental effect on credit rating.)
Three Easy Steps for You to Get Bankruptcy Advice
#1. Acknowledge that you have a debt problem
As we mentioned above, the fact that you’re reading this article likely means that you are concerned that you may need professional assistance to handle your debt. Here are some warning signs that usually indicate that you need professional help:
- you find yourself missing mortgage or loan payments,
- you have reached or exceeded your credit card limits,
- you are only able to make the minimum payments on your credit cards,
- you have taken out a payday loan or cash advance to make ends meet, or have considered doing so,
- you are receiving collection calls, or having your wages garnished.
#2. Contact a Licensed Insolvency Trustee
If you are considering filing for Bankruptcy, you will need the assistance of a Licensed Insolvency Trustee (LIT) to do so. LITs are the only professionals authorized to help Canadian debtors with submitting Consumer Proposals and filing Bankruptcies.
But that’s not all. LITs can offer you a full range of debt-relief options, including budgeting, money management, credit counseling, and Consumer Proposals. LITs are arguably the best trained and most experienced financial advisors in the country. Seasoned LITs have decades of experience helping Canadians with their debt problems.
Not only are LITs licensed and regulated by the Canadian government, but they are also required to adhere to strict rules and regulations when it comes to the provision of debt relief services. It is one of the most highly regulated and audited professions in the country.
You’re going to want to choose an LIT that is close in proximity to you, or at least easily accessible by public transportation. You’ll need to meet them in-person at various points during the Bankruptcy process. The exception to that is if you live in a northern or remote community in Manitoba or Northwestern Ontario. In those situations, the entire process can be carried out through email, mail, and telephone contact without in-person meetings.
#3. Meet with your Licensed Insolvency Trustee
Your first consultation is free, and at LCTaylor, it is not time-limited. We will take whatever time is needed to review your situation and find a solution for you.
It’s at this free initial consultation that you will provide, to the LIT, a comprehensive financial overview of your situation and ask any questions you have. It is important to make sure you give as complete of information as you can at this stage since the advice and information you will receive will be based on the information you have provided. If that information is incorrect or missing, you may not get the best advice possible.
Based on this initial assessment, your LIT will discuss with you all of the debt relief options available to you, the respective pros and cons of each, and will even provide you with their expert opinion as to which may be the best solution for you and your family, and why.
Bankruptcy may not be your only option. The sooner you get professional help, the more options there may be available to you. Don’t let the stigma or fear of the unknown stop you from getting the financial advice you need.
For more in-depth information on Bankruptcy, you can check out more facts here, or email or call us today. Our goal is to help you find the best solution to your current financial problems so that you can achieve the financial freedom you seek. We look forward to your call.
Daniel Maksymchak, LIT
