Mar 25, 2019 07:53 PM EDT

You Need to Know These Bankruptcy Facts

It might take some time to accept that you need to do something to take charge of your debt. Once you're ready to make a big change, you can expect to feel relief about your decision. Nobody plans on becoming insolvent, yet the circumstances that lead someone to seek debt relief could happen to anyone.

With the different avenues to tackle debt, it's best to team up with a Licensed Insolvency Trustee firm. Tackling your debt can be scary, so there's no need to do it on your own. A Licensed Insolvency Trustee (formerly known as bankruptcy trustees) from a reputable firm can guide you through your options for debt relief.

Bankruptcy trustees give you all the facts you need to decide whether you should declare bankruptcy or not. A bankruptcy trustee can help you by explaining how bankruptcy works and what a consumer proposal is. On top of that, they offer credit counselling for you to get on the right path and stay on it as you work towards debt relief.

Bankruptcy Myths

Even though it might sound scary at first, filing for bankruptcy could be the best move someone can make to deal with their debt and get a new start. The details of your personal debt situation guide you to the solution that works best. The public perception of bankruptcy is based on media depictions that are largely inaccurate.

The cliché of bankruptcy meaning that someone is financially ruined is nothing more than a cliché, since in Canada, bankruptcy is a legitimate form of debt relief. It is meant to give people a chance to get back on their feet, not to punish those who are already struggling with finances.

These are just a few of the common misconceptions that many individuals believe when it comes to filing for bankruptcy in Ontario and elsewhere.

  • You will lose 'everything'

    • A bankruptcy trustee can educate you on the ways that bankruptcy would affect you and your assets. In personal bankruptcies, federal and provincial laws could work in your favour and allow you to hold onto many of your assets.

  • You have to sell your home

    • That bankruptcy means you'll lose your home is another popular misconception. Unsecured creditors could be entitled to some equity in your home within certain limits, but very few people actually lose their homes when they file for bankruptcy.

  • You won't be able to get future credit

    • As a means of debt rehabilitation, bankruptcy isn't designed to punish someone. If bankruptcy is the best way for you to get back on your feet, you are by no means sentenced to a life of bad credit. Your bankruptcy will stay on your credit report for six years after discharge.

Path to Recovery
On top of the support you get from a bankruptcy trustee for navigating the debt relief process, you also receive credit counselling that is tailored specifically to your needs. Bankruptcy has its many myths, but it should not be taken lightly. Sometimes a consumer proposal is a better avenue, but if bankruptcy is the best solution, don't despair. It's a step in the right direction to wipe your slate clean and start fresh. 

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