Misconceptions about Bankruptcy in Canada

July 19, 2019 12:33 pm Published by Leave your thoughts

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Many Canadians, when faced with debt, feel helpless. Their only option is personal bankruptcy or consumer proposal, but they feel intimidated by all the things they have heard; bankruptcy is a permanent stain on your credit report, bankruptcy will result in losing everything you own. Fortunately, many of these things are common misconceptions. Hopefully we can clear up some of these.

Bankruptcy does not last as long as you think. Eighty percent of personal bankruptcies in Canada last nine months and cost around $200 per month. After nine months, most debtors are eligible for automatic discharge.

Bankruptcy is not a permanent mark on your credit report. First time personal bankruptcy will stay on your credit report for six years. After six years, the mark will leave your credit report.

Bankruptcy can help to eliminate income tax debt. In fact, bankruptcies and consumer proposals are the only way to reduce government debt and its associated interest. Debt such as student loans, GST, MSP, and income tax can all be dealt with through bankruptcy.

You will probably be able to keep most or all of your assets during bankruptcy.  In BC, there is legislation that declares many assets exempt from being seized, such as RRSPs, home equity, a vehicle, household goods, and tools of the trade.

Debt management can often seem daunting, and the idea of filing a consumer proposal or personal bankruptcy is intimidating for many. Fortunately, speaking to a trustee can help assuage some of these fears. We offer a free one on one session where we can outline your options. Call us and speak to a licensed insolvency trustee today!

 

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Personal Bankruptcy

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