How to avoid filling the bankruptcy.
There are times in your life that you think that your world is just crumbling on you. The credit cards bills are pilling up and you are barely making the ends meet. The creditor are calling and asking for their payments and you have just lost your job and can’t get back on your financial feet.
Don’t declare bankruptcy before you talk to us, there is always a way to get you approved and help you to stand up. At BestRates.ca we help people to get the mortgage approved even without the income. There are many lenders who will give you mortgage based on equity in your house only and even without the income. Give Us a call and we will make it happen.
Filing for bankruptcy in should indeed be considered a last resort due to its significant and lasting impacts on an individual’s financial standing and personal life. Here are several critical reasons why:
1. Impact on Credit Score
Bankruptcy severely damages your credit score. In Canada, a first-time bankruptcy remains on your credit report for at least six years after discharge for Equifax and seven years for TransUnion. This record can make it challenging to secure loans, credit cards, and sometimes even housing, as potential creditors and landlords view you as a high-risk individual.
2. Access to Credit
Obtaining new credit becomes more challenging after declaring bankruptcy. While it’s not impossible, the terms are often less favorable, with higher interest rates and lower credit limits. This can hinder your ability to finance significant purchases or manage cash flow effectively.
3. Loss of Assets
Depending on your province and the details of your bankruptcy, you may have to surrender certain assets to the bankruptcy trustee. This can include property, vehicles, and other valuable possessions, although there are exemptions that protect some assets.
4. Impact on Employment and Professional Licensing
Some professions may have restrictions against licensing or hiring individuals who have declared bankruptcy. This is particularly relevant in sectors that require financial trustworthiness. Additionally, bankruptcy can affect your ability to secure or maintain certain professional licenses.
5. Emotional and Psychological Stress
The process of filing for bankruptcy can be emotionally taxing and stressful. It can impact personal relationships, lead to feelings of failure or embarrassment, and create a significant mental health burden.
6. Costs and Fees
Filing for bankruptcy isn’t free. There are fees associated with filing, including administrative fees and payments to the bankruptcy trustee. While these costs might be manageable compared to your outstanding debts, they add to the financial strain.
7. Long-term Financial Restrictions
Post-bankruptcy, individuals face several restrictions, including limitations on obtaining new lines of credit and potentially higher costs for borrowing. Rebuilding credit takes time and disciplined financial management.
8. Alternative Solutions
Often, there are alternatives to bankruptcy that might be overlooked. These can include debt consolidation, debt management plans, consumer proposals (in Canada, a consumer proposal is an arrangement facilitated by a Licensed Insolvency Trustee to pay creditors a percentage of what is owed to them or extend the time you have to pay off the debts, or both), or negotiating directly with creditors. These options can provide debt relief without the severe consequences of bankruptcy.
9. Public Record
Bankruptcy filings are public records. While not advertised, they are accessible through specific searches, which might concern individuals concerned about their privacy or professional reputation.
Given these significant impacts, exploring all other debt relief options before considering bankruptcy is crucial. Seeking advice from a Licensed Insolvency Trustee or a financial advisor can provide clarity on the best path forward based on individual circumstances. Bankruptcy can offer a fresh start for those with no other viable options, but it comes with considerable drawbacks that can affect one’s financial and personal life for years.
