Bankruptcy happens to almost 120,000 Canadians every year. In bad times the number of bankruptcies and consumer filings increase. When the economy recovers they decline. But they never go away because bankruptcy is a viable solution when people find themselves in too much debt.
Our infographic, below, looks further at the most common fears of bankruptcy often expressed by individuals who come in to see us for a consultation:
- My own carelessness caused my bankruptcy. In fact less than 4 in ten bankruptcies are caused solely due to poor financial management. Illness, job loss and relationship breakdown are much more likely to be a determining factor in filing personal bankruptcy.
- Everyone will know if I file bankruptcy. Your trustee will only inform those who need to know about your bankruptcy which in most cases means only your creditors. You do not need to worry about your friends and family finding out unless you choose to tell them.
- I'll lose everything. Both Canadian and Ontario provincial law have legislated exemptions listing what you keep if you file bankruptcy and the vast majority of people do not lose anything.
- Bankruptcy doesn't get rid of all my debts. Bankruptcy does not deal with secured debts and it's true some debts, like alimony and recent student loans are excluded, however bankruptcy does deal with most unsecured debts including credit cards, payday loans, bank loans, lines of credit and even tax debts.
- Bankruptcy will ruin my credit forever. This is probably the number one fear for most people. While bankruptcy will remain on your credit report for 6-7 years, you can begin the process of rebuilding right away and the fact that you have no debts allows you to gain the fresh start you are looking for.
Find out the truth behind bankruptcy and why it helps so many people find a fresh financial start.