There is a lot to consider when deciding whether or not you should declare bankruptcy. Top of mind is often the question: what will it cost me to file for bankruptcy? Yes, there is a financial cost which will include a monthly payment and there is the potential you may lose non-exempt assets. However there is more than just the financial to consider.
Today's infographic addresses several 'costs' of filing bankruptcy in Ontario. Here is a quick summary of those costs with links to additional information.
Scroll to the bottom of the page to view our full infographic.
The financial costs of filing bankruptcy will include:
- a base contribution each month to cover the administrative costs of your bankruptcy,
- additional surplus income payments if your income is over the government set threshold;
- loss of non-exempt assets like the equity in your home and tax refunds.
Credit and Other Implication
The non-financial costs are something you may want to consider as well:
- bankruptcy will appear on your credit report for 6 years after discharge for a first time bankrupt;
- you cannot be a Director of a corporation while you are bankrupt;
- you cannot sponsor someone for citizenship while you are a bankrupt;
- you may not be bondable while you are bankrupt;
- your ability to borrow money is greatly impacted;
On the Positive Side
While this all seems pretty negative, there are some other factors you should think about:
- most personal and household items are protected from seizure under Ontario law as well as the value of one vehicle up to $5,650. A full list of exempt assets can be found here;
- if you are experiencing debt problems chances are you have no credit today so your ability to borrow is already limited;
- bankruptcy allows you to rebuild you finances and begin on the road to repairing your credit;
- if you have substantial assets (like some equity in your home) or have significant income you can avoid filing bankruptcy by considering a consumer proposal. This still allows you to deal with your debts but protects your home and eliminates the need to make surplus income payments.