I want to buy a home. Will bankruptcy give me that fresh start? Or is there a better option?

I met with an individual yesterday who had accumulated large credit card debts as a result of circumstances beyond their control; they had been laid off for over a year, and used credit cards to get by. They had just found a new job but were worried that it would take them forever to repay their credit cards. This would then prevent them from saving for and buying the home they had dreamed of. They wanted to know if they could declare personal bankruptcy to clear the debts and then start saving for the home.

My answer to them was “bankruptcy is an option, but there is another option”. Bankruptcies are monitored by the Federal government, and they remain permanently in the Federal Government’s Insolvency Name Search database. In the future if he fills out a credit application or job application that has the question “Have you ever been bankrupt?”, the answer will always be “yes”. Thus even though a bankruptcy disappears from your credit report after 7 years, it remains in the government’s records forever.

The solution in this case is a consumer proposal. With the new job, they have the ability to make a deal with their creditors, partially repay their debts, have the balance wiped out, and get a fresh start without having to file for bankruptcy.

Everyone’s personal situation is different; one of our professionals at Hoyes, Michalos can evaluate your specific fact situation. If you would like more information about this option, call or email us so that we can meet with you to work out a plan.

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