Myths and Truths about Bankruptcy

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There are many misconceptions about bankruptcy and personal insolvency.  These situations can seem too large to handle on your own, and that is probably the truth.  Speak with a licensed trustee in bankruptcy in waterloo to thoroughly understand what these actions can mean to you.  In the meantime, here are some facts.

Credit Rating

If you are receiving multiple notices and collection calls, it is likely that your credit rating is already in serious trouble.  Creditors are able to search records to see what your finances are like and that includes whether or not you have filed for bankruptcy and if it has happened more than once.  The details of the action will remain on your record for seven years with the first bankruptcy and for 14 years following the second discharge date.  After that time period has elapsed, the individual can begin rebuilding a good credit rating.

Bankruptcy filing is specific to the person filing the documents.  His or her spouse is not affected unless he or she has co-signed on a loan or is part of the credit cards that have accumulated debt.

Reasons for Bankruptcy

There can be a number of reasons for filing bankruptcy.  Frequently it is through no fault of the individual, but circumstances that have put him or her in that position like loss of a job, health issues, etc.  They can be perfectly fine money managers under normal circumstances but situations have changed so drastically that it becomes overwhelming.

Only Option

Bankruptcy is not the only alternative when finances become difficult.  In fact, when you discuss your situation with a licensed insolvency trustee, you may find several choices.

Debt consolidation

This is when you take a new loan at an interest rate lower than you are currently paying. You use the proceeds from this loan to pay off everything else and you are left with a single monthly payment at a reduced interest.

Financial planning

Working with a counsellor to develop a budget within the current income and eliminating all unnecessary spending.

Consumer proposal

This is an option under the Bankruptcy and Insolvency Act where the debtor works with a licensed insolvency trustee and negotiates a percentage of the debt to be repaid within a specified number of years. The trustee collects the payments and distributes them appropriately.

All Debt is Gone

Bankruptcy may not clear you of all you owe.  It deals with unsecured debt like credit cards, payday loans, etc.  There are also some unsecured debts that will remain like child support, court-ordered fines, and some student loans.

Secured loans are those for which collateral has been pledged.  That means if the individual doesn’t make the payments, the lender can repossess the property and sell it.

As you can tell, there are a number of variables involving bankruptcy and insolvency.  It is best to discuss your particular options with a licensed Kitchener insolvency trustee before making any final decision.


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