Bankruptcy can sometimes be your best way out of an overwhelming debt situation but you should consider how the law forces a Trustee in Bankruptcy to operate in Canada before handing over all your assets and debts to the Trustee. Bankruptcy is not an easy or quick fix; it is a serious decision with significant consequences.
The bankruptcy process must be administered by a Trustee in Bankruptcy. Most Trustee’s have both an accounting designation and a university degree. They must also pass a bankruptcy and law course. When considering filing for bankruptcy, always deal with a licensed trustee; that is, a trustee who has obtained a license from the Superintendent in Bankruptcy pursuant to the Bankruptcy and Insolvency Act (Canada).
What most people don’t know is that even though you pay a Trustee for filing an assignment in bankruptcy, they are working on behalf of you and the creditors that you owe.
Because a Trustee is essentially a court appointed agent for the creditors, they are not necessarily looking after your best interest. The Trustee works towards returning the money you owe your creditors through the assets you hand over during the bankruptcy process.
You will present all of your debts and most of your assets to the Trustee. Very little of your assets are exempt from bankruptcy. In Ontario for example, you may keep your car if it is worth less than $5,650, necessary and ordinary wearing apparel up to $5,650, certain tools up to $11,300 if required by your trade, up to $11,300 of furnishings and certain types of life insurance. Most of your other assets are available for seizure and may be lost including your home, and your investments (except RRSP’s and pension plans in certain cases).
As a result, always consider doing everything you possibly can do to avoid going bankrupt.
If you owe more then $10,000, have steady income and want to avoid filing for bankruptcy, then you should consider debt settlement as an option. A debt settlement company can help you avoid bankruptcy by negotiating a settlement for much less then you owe today.
In most cases you pay back about half of what you originally owed your creditors including the fee to perform the debt negotiation service for you. The total time frame to your debt freedom can be as short as 1 month or as long as 36 months. It will depend on your capacity to settle your debts. Debt settlement is an excellent way for you to get rid of your debt fast while saving a substantial amount of money.
Unlike a Trustee in Bankruptcy who basically works as an intermediary for both the debtor and creditor. A debt settlement company is working for you only. That means that they will work to save you as much as possible. Always look at all of your options when considering bankruptcy. Every debt elimination program has advantages and disadvantages to the process, here’s what we have learned about Bankruptcy.
Bankruptcy advantages:
- Collection harassment will stop
- Nothing to lose if you have no assets
- A fast and sure way out of debt
- Appropriate for those with limited or reduced income
Bankruptcy disadvantages:
- Can be an extremely intrusive and unpleasant experience
- All information about your bankruptcy is available to the public
- Devastating to your credit rating
- Completion rates of the Bankruptcy process raises concern
- All non-exempt assets must be given to the Trustee in Bankruptcy
- Impacts ability to work some jobs: (examples; real estate agent, or handling money)
Generally speaking, if you suffer from financial hardship, are insolvent, have very limited income or have been laid off, and most of your assets qualify as being exempt from bankruptcy seizure, then it’s a good idea for you to get a free consultation from a Trustee about going bankrupt.
Don’t be afraid of dealing with your debt. Sometimes bad things do happen to good people or maybe you just made some bad choices in life. We are only human. The worst mistake you can make is putting it off. Either way, if you choose debt settlement or bankruptcy, start your path to debt freedom as soon as you can and get on with living life totally debt free today.
If you feel it’s time to do something about your debt, and want a free debt settlement consultation then please visit our home page and request a no obligation quote.
