Declaring bankruptcy in Red Deer as a means of dealing with bills you cannot pay and threatening calls that are keeping you up at night is not an easy choice. The decision becomes more difficult if you have heard some of the “urban legends” about the terrible things that will happen to you if you proceed with a bankruptcy filing.
Some Canadians who would be better off with the fresh start offered by a declaration of bankruptcy put off the decision because of some of the fictional tales they may have heard. Here are some things you need to know to separate the fact from the fiction about declaring bankruptcy in Red Deer:
- You will not go to jail nor will you lose your passport if you declare bankruptcy.
- Your spouse is not liable for what you owe if you declare bankruptcy.
- You can rebuild your credit rating after you are discharged from bankruptcy.
- Depending on where you live and how much equity you have, you may keep your home if you declare bankruptcy.
- There are differences in the costs of bankruptcy depending on your own financial circumstances.
- A licensed bankruptcy trustee can tell you exactly how a bankruptcy will affect you.
First, there are no debtors’ prisons at the edge of the Arctic Circle and no one does jail time because they cannot pay their bills. Canadian law clearly states insolvency is not a crime. You do not surrender your passport.
Second, if only your name appears on the credit agreement, your spouse is not liable for that debt. In addition, your spouse’s credit rating will not include any information about your bankruptcy.
Third, although a bankruptcy will temporarily stop you from applying for credit, once discharged there are practical things you can do to begin to rebuild your credit rating. And despite what you may have heard, you do not have to wait until the notation that you went through bankruptcy disappears from your credit file.
Fourth, no one loses everything in bankruptcy. However, what you are allowed to keep varies from Province to Province. In Alberta, there is an exemption allowance of $40,000 for home equity, while there is none in neighboring Manitoba.
Fifth, there is no fixed cost to a bankruptcy filing. Filers who make little money and have no assets will end up paying filing costs and trustees fees. Filers with substantial assets and significant income will lose some of it, but never all. If you heard of a friend who walked out of bankruptcy with no debt and no asset or income loss, that applies strictly to him or her. Each individual filer’s circumstances differ so their costs will differ.
Sixth, these fictions arise from two sources. Some credit collectors attempt to frighten consumers into action, regardless of how far they stretch the truth. They usually do it with “half-truths” where the threat of legal court action – which is a real possibility – is stretched with an implication jail time could follow the court action. To get the real truth about declaring bankruptcy in Red Deer and what it will mean to you in specific terms, meet with a licensed Red Deer bankruptcy trustee. Do not let the fiction prevent you from learning the true facts.
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