16/06/2017 0 Comments
Advantages of Filing for Bankruptcy
Managing debt is time-consuming. Every month you have to decide which debt can be paid and which payments can be put off. Collection agents contact you regularly and sometimes at inopportune times, trying to gain your commitment to pay what you owe.
Unfortunately, some collection firms in Canada have enlisted agents to phone or visit debtors daily, including Sundays, during prohibited hours (of between 9 p.m. and 7 a.m.), using threatening language, and accosting friends and relatives. Yet, there is legislation in place restricting the activities of debt collectors, including that they can’t email, leave a voice mail or speak to you in person more than three times in one week after the first conversation with you. Ontario's Ministry of Consumer Services receives more complaints about collection agencies than any other business.
Without bankruptcy protection, your creditors may obtain a court order to garnish your wages. Your employer will be obliged to make deductions from your pay cheque in accordance with directions contained in the court order.
Once you have filed for bankruptcy, you will experience the benefits of your decision first hand. Some of these advantages are outlined here below.
Stop Collection Activities and Legal Action
As soon as you declare bankruptcy, you will no longer have to deal directly with your creditors; there is a stay of proceeding in place whereby all your creditors must file a proof of claim with your trustee. That means that the relentless attempts to contact you, and any lawsuits and wage garnishments against you will stop.
Reduce Harmful Stress
Knowing your debt will be dealt with can provide you with tremendous relief. Many studies have documented the negative health effects of indebtedness. In the past 12 years, more people aged 40 to 64 have been overwhelmed with the financial stress of being heavily in debt, according to Dr. Ferguson of the Centre for Addiction and Mental Health. Further, higher rates of debt and bankruptcy are being seen amongst seniors; seniors in Ontario make up 30% of bankruptcies, according to a two-year study, in 2013 and 2014.
Eliminate Your Eligible Debts
Filing for bankruptcy means you will soon be free of all your eligible debts, including your student loan if you have been out of school for 7 years. Your taxes will also generally be discharged. Debts which you may still owe are those pursuant to Section 178 of the Bankruptcy and Insolvency Act, such as student loans that are less than 7 years old; alimony, child, or spousal support; certain court fines or penalties; and debts you incurred due to fraudulent misrepresentation.
You Can Keep Certain Assets
By declaring bankruptcy, you won’t have to lose all your assets. Certain assets are exempt, such as your house and car in many situations, so long as you continue to pay your secured creditors and there is no equity. You can also keep furniture, personal items, and various equipment you need for your work up to a legislated amount.
You Can Carry On Routinely with Many Other Areas in Your Life
Not everyone will know about your bankruptcy. While it is available as a matter of public record, most bankruptcies are not published in the newspapers, which usually announce only corporate and very large personal bankruptcies. Your creditors and the Superintendent of Bankruptcy will know about your bankruptcy but your employer will generally only be notified if the trustee has to stop a garnishment of your wages.
During bankruptcy, you will still receive your wages as usual from your employer, free of any garnishments except those for child or spousal support. You will be required to make monthly payments to your trustee depending on your net monthly income and size of family.
You can also still run or open a business while you are in bankruptcy. You may be required to disclose that you are bankrupt to supplies and other from whom you receive credit.
You are also entitled to continue with your life insurance after bankruptcy. You will lose the cash surrender value of the policy if there is one.
Get On with Your Life Sooner
Typically bankruptcy is a shorter process than a consumer proposal. First-time bankrupts are eligible for an automatic discharge 9 months after the bankruptcy started and subsequent bankruptcies require the court to grant the discharge. If your bankruptcy takes less time to recover from than struggling to pay your debts for years, you can potentially rebuild your credit sooner.
In most cases, you can significantly improve your credit rating by paying off your bills on time over a two-year period after the bankruptcy discharge. With a good job, minimal debt obligations, and an excellent payment history, you should eventually be able to get a mortgage and own a home.
File for Bankruptcy in Kingston & Beyond
Although bankruptcy is often thought of as an option of last resort, it can provide you with a new beginning. If your debts are affecting your daily life, it is time to speak to an expert in insolvency. We are Licensed Insolvency Trustees with offices in Kingston, Belleville, Cobourg, and Trenton. Bankruptcy is a process we deal with routinely. Call us for debt help.