Should I File for Bankruptcy

Are you asking the question, “Should I file for bankruptcy?”  To answer the question, you’ll need to do a thorough examination of your finances and consider all of the ramifications (both positive and negative) of a bankruptcy filing and explore all of your alternatives.

Are you headed for Bankruptcy

Warning Signs of Financial Difficulty

There are many warning signs you’ll see before you reach the brink of bankruptcy.  Recognizing these signs early can actually help you avoid the need to file.  Do any of these warning signs apply to your situation?

  • You can’t afford your bills each month
  • You’re being contacted by creditors
  • Your credit cards are at or close to their limits
  • Your payments are late
  • You’re using credit for necessities
  • You’re not sure how much you really owe

If any of these warning signs apply to you, it’s time to address the financial problems that you’re having, before they escalate.  If you’ve said yes to any of these signals, does that mean you should absolutely file for bankruptcy?

When You Should Consider Filing for Bankruptcy

There are many things to consider before filing for bankruptcy.   While it’s a very positive solution for some, it’s not the best solution for all.  Reasons you should consider filing include:

  • You’re insolvent and simply cannot manage your bills through your current income or the sale of your assets
  • You’ve tried on your own to negotiate your debt or have tried other ways of managing your debt with no success
  • You’ve met with a licensed trustee and they recommend bankruptcy as your best course of action

The Positives of Filing for Bankruptcy

  • You will have legal protection from your creditors who will no longer be able to contact you or try to collect what you owe
  • You will be excused from the majority of your unsecured debt
  • You will attend two mandatory credit counselling sessions which will help you learn to better manage your money
  • You’ll have a clean financial slate upon discharge from bankruptcy
  • Freedom from debt will relieve your financial stress
  • You can be discharged from bankruptcy in as few as nine months

Negatives of Filing for Bankruptcy

  • You will not be able to borrow throughout the duration of your bankruptcy
  • Asset loss and possible surplus income payments
  • Not all debts will be erased in bankruptcy, but the most part of your unsecured debts can be
  • It will have a negative effect on your credit
  • Filing for bankruptcy can be an emotional decision

Alternatives to Bankruptcy

If you are experiencing financial difficulty, bankruptcy is not your only option.  There are many solutions, both informal (solutions you can try on your own) and formal (which will require the services of a licensed debt professional) to repair your finances.

Informal Solutions Include:

  • Negotiation with your creditors
  • Budgeting
  • Debt Consolidation
  • Asset Liquidation

Formal Solutions Include:

  • Consolidation Order (Orderly Payments of Debts) – available as an option in Alberta, Saskatchewan, and Nova Scotia
  • Consumer Proposal

The answer to the question “Should I File for Bankruptcy?” is not a simple one, there are a lot of things to consider. If you think bankruptcy might be an option, the first thing you should do is contact a licensed trustee in bankruptcy in your area for a free consultation.  A trustee will review your finances in detail, advise you of your available options for debt relief, and make a recommendation.  A trustee will provide you with an answer to the question, “Should I file for bankruptcy?”