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How Does Personal Bankruptcy Work?

Is your financial situation suffocating you? Are your debts weighing you down? Declaring personal bankruptcy may be the best decision for you. This process will allow you to reset the clock and start over on a sound footing.

However, keep in mind that there are other approaches to getting out of debt. Make sure to schedule an appointment with a Licensed Insolvency Trustee so they can help you find the best way to approach your situation. In certain cases, a consumer proposal may be the preferred choice.

The Process for Declaring Personal Bankruptcy

    Meet with a trustee. At this stage, the trustee will conduct a complete analysis of your situation and determine if bankruptcy is the best way to solve your debt problem.
    Calculate monthly payments. Using a formula, the trustee will determine the amount you must pay each month and explain the preliminary calculation when you sign the file. They will then review the calculation with you again later in your file.
    Liquidate your assets. If you have assets that are subject to seizure, the trustee will take care of liquidating them. However, as many assets are not subject to seizure, the trustee will explain to you which of your assets are exempt.

Examples of assets that are exempt:

    Furniture and personal effects
    Lien-free vehicles
    Certain types of investments
    Business equipment

    Attend consultation meetings. You will attend two budget consultation meetings with your trustee, or the qualified advisor designated to them, in order to gain the skills needed to avoid future financial problems.
    Have your debt discharged. Finally, if your file is in order and you meet all the deadlines, your debt will automatically be discharged. This will allow you to start over in good standing.
    Compile a final statement. At this point, the trustee will compile a final statement for your creditors and for the superintendent. You will receive a copy. Please note that this is not an invoice, but rather a report that you can keep in your files.

The Long-Term Effects of Personal Bankruptcy

When an individual declares bankruptcy, a record of bankruptcy is added to their credit report. If it is their first bankruptcy, the record will remain on file for approximately 7 years. If the same individual files for bankruptcy again, the record will remain on file for 14 years.

If you do not pay off your debts, your credit score will suffer, and the effects will continue over time.

Don’t wait. Learn more and discuss your situation with a trustee. Talk with us today.


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