The biggest single advantage of bankruptcy is that it gives you a fresh financial start. Despite the negative attitudes that many of us hold towards it, bankruptcy is sometimes the only sensible option if you are unable to service your debt and are unlikely to be able to do so in the foreseeable future.
The practical benefits of bankruptcy include:
Filing for bankruptcy gets rid of unsecured debts, the majority of which result from high-interest credit cards. Some debts are excluded (see Debts That Are Not Erased during Bankruptcy or Consumer Proposals) from this process. Bankruptcy is usually completed within nine months, rather than the years that it may take to fulfill a consumer proposal or consolidation loan (if you can get one).
Filing for bankruptcy immediately stops phone calls and letters from creditors, as well as any wage garnishees or legal actions.
Bankruptcy is usually the least expensive solution to insolvency.
The less tangible benefits of bankruptcy include:
Relief from stress caused by constantly worrying about paying debtors and meeting your bills.
Improved relationships with your spouse or partner. Arguments about money are cited as one of the leading causes of divorce in Canada.
A future in which, while you probably have to make some money management changes, you no longer have a crushing burden of debt.
Frequently Asked Questions
- What is bankruptcy in Canada?
- Will bankruptcy wipe out all my debts?
- Will bankruptcy stop my creditors harassing me?
- What are the advantages of bankruptcy?
- What are the disadvantages of bankruptcy?
- What is the difference between a consumer proposal and bankruptcy?
- What causes bankruptcy?
- What is a licensed insolvency trustee?
- Can I choose my own licensed insolvency trustee?
- Does the licensed insolvency trustee work for me?
- Will the licensed insolvency trustee come to my house?
- Are my tax debts forgiven in bankruptcy?
- Are tax debts different from other debts during bankruptcy?
- Why did my licensed insolvency trustee tell me to file all outstanding tax returns?
- How long does bankruptcy last?
- What is Chapter 7 bankruptcy?
- What is Chapter 13 bankruptcy?
- What are my responsibilities if I go bankrupt?
- Am I eligible to file for bankruptcy?
- I have filed for bankruptcy, but why am I still getting calls and letters from collection agencies?
- When should I declare bankruptcy?
- Does it cost anything to declare bankruptcy?
- Should I feel bad that I declared bankruptcy?
- Do I have to list all my debts when filing for bankruptcy?
- What is required of me during bankruptcy?
- Why does my licensed insolvency trustee require me to fill out a budget?
- How do I make a budget for my bankruptcy assessment?
- Why does my licensed insolvency trustee need a monthly financial report?
- Why must I attend credit counselling in bankruptcy?
- Can you tell me about my debts and bankruptcy?
- Are there debts that I can’t get rid of during bankruptcy?
- I’m declaring bankruptcy because of taxes. Is this allowed?
- Will I still owe my student loan after bankruptcy?
- Can I keep my car during bankruptcy?
- Can I keep my RRSP during bankruptcy?
- Can I keep my home if I declare bankruptcy?
- Will I still be able to rent an apartment or home if I declare bankruptcy?
- Can I keep a credit card during bankruptcy?
- Is it okay to use a credit card if I am thinking about bankruptcy?
- Can I get a checking account after bankruptcy?
- If I’m married and I file for bankruptcy, does it affect my spouse’s credit?
- If I file for bankruptcy, will it be noted on my spouse’s credit file?
- Will filing for bankruptcy affect my job situation?
- Who will find out about my bankruptcy?
- Can I get utility services (telephone, cable, hydro, gas, etc.) after bankruptcy?
- Can I keep any money if I declare bankruptcy?
- Can I go to jail for not paying my debts?
- What happens if I live in both Canada and the U.S. and declare bankruptcy?
- Are there alternatives to bankruptcy?
- Can I avoid bankruptcy by changing my spending?
- What is the difference between a consumer proposal and a consolidation loan?
- Is a consumer proposal a better solution than a debt management plan?
- I can’t afford to pay back my student loan and it’s been less than seven years since I left school-what are my options?
- I co-signed on a loan for someone who declared bankruptcy. What happens now?
- If my spouse declares bankruptcy and I am listed on their credit cards, am I responsible for the debt?
- I am divorced and my ex has declared bankruptcy. Do I still owe for debts and credit cards that I co-signed with my spouse?
- What is surplus income?
- What are unsecured debts?
- What is a secured debt?
- The collection agency is threatening to take me to court: can they do that?
- What happens if a collection agency takes me to court?
- I am behind on my debt payments; can a collection agency take my furniture, electronics, clothes, etc.?
- I am being harassed by a collection agency: what can I do?
- How do I find out if someone is bankrupt?
- Can I stop a wage garnishment?