Should Personal Bankruptcy in Canada Always Be A Last Resort?

Posted by: Sandy Lyons on 06/19/2011

Many of the people who come into our offices ready to file for personal bankruptcy in Canada are simply tired of dealing with creditors.  In most cases, something like a wage garnishment or a collection lawsuit is the tipping point that makes them seek what they have been told should be their last resort.

Should bankruptcy always be the last resort for people in severe financial difficulty?  What are the alternatives?

On occasion, we deal with clients who enrolled in one of those debt solutions you see advertised on television all the time, but later found they were still dealing with creditor collection activity.  The truth is those programs have no legal standing to stop creditor collection activity. 

If you are getting threatening calls and letters and have no way to make the payments, personal bankruptcy in Canada will stop those threatening actions.  If your wages have already been garnished, that too will stop, and your wages will be restored.

Bankruptcy is a cost-effective means of eliminating unsecured debt and getting you back on your feet.  There are drawbacks and some are significant.  That is probably why so many financial experts talk about bankruptcy as a last resort.

You really should know that the disadvantages of personal bankruptcy in Canada depend on your situation.  If you do not know what a bankruptcy would do for you and to you, how do you know it should be your last resort?

The biggest downside to personal bankruptcy is asset loss.  However, did you know some Canadians lose absolutely nothing when they file for personal bankruptcy in Canada?

 Did you know there are provincial exemption allowances for personal assets and Alberta has some of the most generous of any province in Canada?  If you own a home and have less than $40,000 in equity, you will not lose your home in a bankruptcy filing.

Did you know you could complete a bankruptcy filing faster than with any other structured debt solution?  For first time filers, the bankruptcy process lasts from nine to twenty-one months, depending on your income.  Credit counseling solutions and debt settlement plans take from three to 5 years to complete.  And remember, during that time you may still be dealing with creditor calls.

If you are tired of dealing with creditors, why not schedule an appointment with a licensed bankruptcy trustee.  Initial consultations are free and we can not only explain what a bankruptcy would mean for you, we also have a non-bankruptcy option that legally protects your from dealing with creditors called a consumer proposal.