Filing A Bankruptcy – Is It Really That Easy?

More often than not, when people find themselves in financial trouble they’re usually not sure what options are available to help them get back on track. Well-meaning friends and family may suggest a bankruptcy as a quick and easy solution. Even some insolvency firms who present themselves as having your best interests in mind, will say it only takes half an hour to come up with a plan to solve your debt problems.

If you want the truth, it’s a little more complicated than that. Financial difficulties are as unique and complex as the people experiencing them. Our professionals take the time to make a complete assessment of your personal situation and the different options available to you. For many, a bankruptcy should actually be treated as the last resort, not the first.

Here are some reasons why a bankruptcy may not be the quick and easy solution:

• If your household income is above the guidelines set by the Superintendent of Bankruptcy, you will be required to make a payment towards your debt based upon a pre-set formula. Also, in this situation, if it is your first bankruptcy, the time period is extended from 9 months to 21 months. If it is your second bankruptcy, the time period extends all the way to 36 months.
• Your income will be monitored during the bankruptcy. If your income increases, so will your payments, making the decision to take on extra shifts or work overtime, a little more difficult.
• Do you have equity in your home above the exemption limit? If so, the value of the equity must be paid into the bankruptcy estate. This usually results in high payments over the term of the bankruptcy.

For some, a bankruptcy is the right route to achieving a fresh start, allowing them to put their debt problems behind them and look to the future rather than paying for the past. If it is your first bankruptcy and you are not required to make any of the extra payments listed above, the 9 month period you are in bankruptcy before being discharged can go by quite quickly. A bankruptcy also includes two mandatory credit counselling sessions where you will also learn more about your own spending habits and ways in which you can rebuild your credit score.

Contact your local MNP advisor today for a free, no-obligation consultation. One of our Licensed Insolvency Trustees will be able to give you a full perspective of what debt solutions are available, so you can choose the route most manageable as you work towards achieving your short and long-term financial goals. Financial freedom is attainable, it’s only a matter of how you choose to get there!