Bankruptcy has got a bad reputation. As a trustee, I notice that money problems are still a taboo nowadays. The fear of going bankrupt leads many people to avoid meeting with a trustee. Yet bankruptcy is a perfectly legitimate solution to get out of debt. Each year, between 60,000 and 65,000Â Canadians find out that bankruptcy may actually be of help.
Bankruptcy – A last resort solution
First off, I want to make it clear that bankruptcy must only be used as a last resort solution.
Meeting with a trustee is the most appropriate way to determine if bankruptcy is the solution to settle your debt. This professional will indeed be able to assess your financial situation and, if possible, propose alternatives.
If bankruptcy proves to be the best solution, it is generally because all other alternatives are unlikely to succeed.
Furthermore, it is important to emphasize that, to maintain the integrity of the Bankruptcy and Insolvency Act, we must ensure that bankruptcy does not allow dishonest people to get out of trouble by easily abusing the system. In other words, make sure people aren’t using bankruptcy to commit fraud.
7Â ways bankruptcy can help you
The bankruptcy process exists because there is a need for such a solution. Honest debtors struggling to make ends meet are entitled to a new start. This is precisely what bankruptcy is there for.
Bankruptcy however is not without consequence, mainly on one’s credit rating. But sometimes the benefits from such a procedure nevertheless justify its use. Here are 7 ways bankruptcy can help you:
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Terminate phone calls from collection agencies
If you’re overwhelmed by debt, you perhaps get phone calls from collection agencies. These agencies may prove to be far too insisting, harassing even. Such repetitive phone calls may quickly become a source of anxiety. Bankruptcy stops recovery measures and prevents collection agencies from calling you.
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Protect you against wage garnishment
If creditors are considering garnishing your salary, bankruptcy will prevent them from doing so. Likewise, bankruptcy revokes any garnishment action already in force.
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Simplify debt management
When you go bankrupt, you only have one monthly payment to make, directly to the trustee. The amount of this payment is based on your income. Therefore you do not have to worry about most payments you were required to make for debts already incurred. From then on, the trustee in bankruptcy will handle these debts. You won’t have to manage them anymore.
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Reduce the health risks associated with stress caused by debts
Many people that I meet in my practice admit that they experience high stress levels. Some of them go as far as confessing that their debt keeps them up at night. Hence debt problems involve health risks that are very real. When a debtor opts for bankruptcy, he or she generally feels freed from an enormous burden. Stress goes down, and sleepless nights aren’t as common thereafter.
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Save your couple if debt is the main source of conflict
Debt problems are at the heart of many marital separations. A separation can be very costly. Ultimately, it can put people into even deeper financial distress. Unfortunately, this is a vicious circle and ex-spouses may have no other choice than to file for bankruptcy later on. Had they opted for bankruptcy earlier, there’s a chance they could have got through this crisis. Many disputes could have been avoided and couples concerned could have enjoyed pursued their relationship harmoniously.
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Provide an opportunity to learn from our financial mistakes
We learn from our mistakes just like we do from our successes. Curiously however, our perceptions regarding failures are still very negative. Given that bankruptcy is somehow associated with failure, it is only natural for anybody to try and avoid at all costs going bankrupt. But then again, many leading business personalities have been compelled, at some time in their life, to file for bankruptcy. Henry Ford, Walt Disney and Donald Trump are just a few examples. They have managed to get back up again and, thanks to the lessons learnt from these experiences, became even more successful after their misfortune.
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Provide an opportunity to make a new start
Bankruptcy is a last resort solution to a desperate situation. It is meant to provide honest people with a means to make a fresh start, free of debt. It is an opportunity to leave behind past errors and hardships and start from scratch.
Finding help at the right place
Only trustees are authorized to administer the bankruptcy procedure. If this solution seems to be the only possible way out of your debt problems, professionals at Ginsberg Gingras can help you.
On the other hand, it is often possible to avoid bankruptcy by filing a consumer proposal. Most people who meet with a trustee as soon as warning signs of financial problems arise succeed in avoiding bankruptcy by choosing this alternative.