We know from experience that debt problems are typically not a sign of weakness or bad decisions. Often circumstances beyond a person’s control such as divorce, illness, inherited debt or unemployment can make debts unmanageable.
So, our role is to help people explore every possible way to resolve their debt problems. There are options and we frequently help people implement solutions that avoid bankruptcy. We understand people may feel there is a stigma or a sense of failure attached the idea of going bankrupt.
However, there are times when bankruptcy is absolutely the best (or only) course of action.
Keep in mind that sometimes efforts to avoid bankruptcy can actually make things worse. An individual may use a line of credit or take on a new loan to deal with debt. These may help in the short term but ultimately can increase debt problems. We know people want to avoid bankruptcy because of the impact on their credit rating. While it’s true your credit rating ‘takes a hit’ when you go bankrupt—it is also negatively impacted when payments continue to be missed.
The positive outcome of going bankrupt is that you are finally able to have a ‘fresh start’ after years of trying to cope with excessive debt and feeling like you are not getting ahead. And, many people don’t realize that tax debt to Revenue Canada is a dischargeable debt in bankruptcy too.
When you declare bankruptcy you are allowed to keep your RRSP’s and you may be able to keep your home, car and your ‘tools of the trade’ (exemption amounts apply), so realistically you can be in a good position to ‘start over’ and rebuild your financial situation. Keep in mind that during a bankruptcy you will be making regular payments towards your estate and once you’re discharged from bankruptcy, with the habit of making these payments, you could consider taking this same amount each month and placing it in an emergency fund, savings for retirement or a down payment.
Bottom line: there are situations where declaring bankruptcy is the responsible choice and the quickest way to a new, stronger future.
To learn more about bankruptcy and whether it is the best course of action to address your debt issues, contact us for a confidential, no-obligation, complimentary consultation. Call us toll free from anywhere in Alberta 310 8888 for a free consultation or visit our website at www.gt.alger.ca for more information on your debt options.