What Is A Bankruptcy And How Does It Work?

Bankruptcy

When overwhelmed with debt, you have many options and one of them is to file for bankruptcy. Filing for bankruptcy is never an easy decision. You may have looked for other forms of debt settlement Toronto but you’re left with no option. Most people wonder whether they will get to keep their personal items or cars when they file for bankruptcy. To add on to this, comes the pressure and stress of dealing with creditors, debt collectors and persons who are threatening to take legal action against you. It is important to weigh your options and make the right decision to handle your debt problems.

Why file for bankruptcy?

Filing for bankruptcy can help to restore your sanity by putting a stop to the harassing calls from creditors and legal action taken against you. However, it is important to determine if bankruptcy suits your unique situation. Bankruptcy may turn out to be an ideal way to handle debt problems if you don’t really own a lot of assets or have enough equity in your home. It could be the best debt option for you if you are no longer able to make monthly debt payments or bills and you have creditors threatening to take legal action against you. Filing for bankruptcy can award you a fresh start even though the ramifications can be felt years later.

What is required to file for bankruptcy

You need to owe not less than $1,000 in debt in order to be eligible to file for bankruptcy. The filing will only be approved if it is proven that you are unable to make monthly payments considering your current financial situation. Most experts recommend filing for bankruptcy if the amount of money you owe is much higher than the value of the assets you own.

Will you lose everything?

Not at all. After filing for bankruptcy, you may still get to keep your assets. There are a number of items that are protected by the Bankruptcy and Insolvency Act. This helps individuals undergoing financial issues to be able to get their life back on track even after filing for bankruptcy.

What to expect after filing for bankruptcy

The process of filing for bankruptcy usually lasts for 9 months. After the entire process is complete, you can start to take steps to build back your credit worthiness. This includes making sure your monthly bills are paid on time and making lifestyle changes to reduce your expenses and save more money. Remember that it is easy to get back into debt after filing for bankruptcy so take an initiative to make changes in order to prevent this.

Other than the fact that you may get to keep some of your personal possessions, filing for bankruptcy means that you will no longer get the harassing phone calls from debt collection agencies and creditors. If you were facing any wage garnishments, this will stop immediately you file for bankruptcy. However, take note that filing for bankruptcy is never the only solution. Other options such as debt consolidation Toronto can help you sort your financial issues. You need to speak to a licensed insolvency trustee who will advise on the best debt relief option based on your current financial situation.

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