If you’re researching bankruptcy in BC you’ll find an overwhelming amount of available information, whether it’s from the internet, friends and family or even a financial advisor. Unfortunately, it won’t all be true… A lot of people tend to make up their mind that bankruptcy is NOT for them simply because they heard or read the wrong thing. To help clear up some of those common misconceptions, here are 5 things you may not have known about bankruptcy:
$1,000 minimum: Here’s a number that often surprises people – $1,000 is the minimum amount a person needs to owe in order to file a bankruptcy. While it’s uncommon for someone owing $1,000 to make a bankruptcy assignment, each person’s situation is unique and sometimes a $5,000 debt load can be just as unmanageable as a $75,000 one.
No income cap: Whether you’re earning $500 or $5,000 a month, bankruptcy still may be an option for you to resolve your debts. Household income is used to determine the length of time a person will be in bankruptcy (9 months or 21 months for most cases) and also what they would have to pay on a monthly basis (surplus income). For those earning enough to comfortably pay something towards their debts a Consumer Proposal may be an alternative, but if unsuitable for other reasons, a person’s wage does not prevent them filing for bankruptcy.
Your credit will recover: Filing for bankruptcy does not mean you’re forever unable to get credit. In fact, during the time a bankruptcy is reflected on a credit report (6 years from the date of discharge in a first-time bankruptcy) it is still possible to apply for and receive credit. The vast majority of individuals who claim bankruptcy do move on to get mortgages, credit cards, vehicle loans, lines of credit etc if they choose to. Your bankruptcy will not be a ‘life sentence’ with respect to future credit.
You can own assets: There is no provision under bankruptcy legislation that strips bankrupt individuals of their assets – quite the opposite! When filing for bankruptcy there are a number of assets that are exempt from seizure and most people retain all of their assets. Even if you own something that is not considered exempt it does not necessarily mean that you would be required to part with it; quite often people will repurchase the value of the item to the trustee in order to retain it.
Yes, it covers… Some of the most common things people assume bankruptcy doesn’t cover such as: debts with Canada Revenue Agency, student loans (if you’ve been out of school for at least 7 years), outstanding MSP premiums and debt due to gambling are in fact relieved. Most debts are dischargeable through a bankruptcy, although there are some exceptions which include: court imposed fines, alimony and maintenance payments, money owing for things stolen and property obtained through false pretenses. Bankruptcy is targeted at the ‘honest, but unfortunate debtor’. As long as you can comfortably say that you’ve been honest in your dealings, bankruptcy will allow you to start again fresh.
While we hope that this has helped to clear up any misconceptions, the bottom line is that if you’re looking for real solutions to debt problems it’s best to check with a reputable professional in that field (in this case a Trustee in Bankruptcy). After all, the only way you’re able to make solid decisions is with all the facts at hand, not fiction.
Find out if bankruptcy is the best debt solution for you – book your confidential free debt consultation with a caring, non-judgmental debt expert from Sands & Associates today.