Watch now to learn the most common myths about bankruptcy in Canada.
It’s good to take a look at our beliefs every now and again. We may have preconceived notions about bankruptcy that just aren’t true. Here are the most common myths busted.
1. Everyone will find out about my bankruptcy
For anyone considering bankruptcy in Canada, it’s natural to be concerned that other people will find out. Friends, family or even your employer will get to know about your bankruptcy.
Let’s bust that myth right now – a bankruptcy and consumer proposal become a matter of public record, but that does not mean anyone will see it.
The vast majority of the time, the only people that will know you declared bankruptcy are yourself, your trustee and your creditors.
2. I will lose everything
It’s this simple – you don’t. There are bankruptcy laws relating to what you can keep. They vary from province to province.
However, all provincial governments have established limits on what possessions you have to forfeit.
Basically, you get to keep the necessities of life, within certain dollar limits, which include:
- Your household goods
- Personal belongings
- Your car
- Tools of the trade
- Pensions and RRSP’s
- Your principal residence, if the equity is less than $9,000
So it’s certainly not doom and gloom on the other side of a bankruptcy.
3. Bankruptcy erases all your debts
Not all debts are erased – there are exceptions.
Debts that will remain, even after you have filed for bankruptcy include:
- Secured debts (loans that were granted against collateral)
- Student loans if less than 7 years old
- Alimony and child support
- Fines and penalties imposed by a court
- Debts incurred by way of fraud
4. My credit rating will be destroyed
Bankruptcy is a negative mark on your credit history.
But the alternative of going deeper in debt will have an even more negative impact upon your credit rating in the long run.
A bankruptcy stays on your credit report for between 6 and 7 years for a first-time filing.
In fact, filing for bankruptcy can be one of the best ways to begin repairing your credit for the future.
Upon discharge you can aggressively rebuild your credit rating and even apply for a credit card again.
5. Licensed Insolvency Trustee only do bankruptcies
This couldn’t be further from the truth. Licensed Insolvency Trustees (LITs) have a wide array of debt solutions.
Filing for personal bankruptcy is only one them.
When it comes to solving problem debt, LITs are the most highly trained and committed professionals in Canada. They are also the only experts that are licensed by the federal government.
Trustees must adhere to a strict set of guidelines and are obliged to provide the most suitable solutions in each individual case.
So no – Licensed Insolvency Trustees don’t only do bankruptcies.
So that [this] light at the end of the tunnel isn’t an on-coming train.
Now that we have dispelled some of the most common myths maybe it’s time to reach out and chat to someone. You probably still have questions regarding your own particular situation and we would be happy to address any of your concerns.
In complete confidence and costing you nothing, you can talk about your problems and be assured of not feeling judged.
Call today and take a positive step toward getting your life back.