Bankruptcy Protection

Bankruptcy_ProtectionIf you are struggling financially under a crushing burden of debt, the Bankruptcy and Insolvency Act (BIA) – the federal law governing bankruptcies in Canada – offers you full legal protection from your creditors.

As you may already know, the further you fall behind with your creditors, the more incessant their efforts to collect become.

First, it’s a gentle reminder by phone, but over time the frequency of calls increases while the civility of the calls often decreases.  Next come the threatening letters, outlining in detail all the means they have at their disposal to attach what little money you have.  Garnished wages, attached bank accounts, legal action, all part of their scare tactics designed to make you pay.

At some point, though some of those threats transcend the written word and are translated into reality.  Your wages are garnished and now you have less money on which to live.  Your bank accounts are frozen and you find yourself scurrying around for help.  Lawsuits are filed and you have no money to hire a lawyer to represent you. What do you do now?

Filing for bankruptcy protection can put an end to your financial difficulty.  Here are five benefits you can expect from declaring personal bankruptcy:

1)All collection attempts will stop.

The “stay of proceedings” issued when you are accepted into bankruptcy will inform your creditors to stop collection activities immediately and cease any attempts to communicate directly with you in any way.

2)Garnishments will be lifted.

If your wages have been garnished, bankruptcy protection will stop any garnishment orders and restore your monthly income.

3)Most unsecured debts are included in a bankruptcy filing.

If you are filing for bankruptcy, Canada law does not allow any of your creditors to object to your filing. Unless it is from a legal obligation such as child support or alimony or other court order, your unsecured debt should be included in and forgiven with a bankruptcy.

4)You can complete a bankruptcy in as little as nine months.

Bankruptcy might be the fastest way to get out of debt.  First time filers who have no surplus income to declare, can complete a bankruptcy in as few as nine months.

5)You can begin rebuilding your credit immediately upon discharge.

If your credit rating has fallen due to late payments and accounts submitted for collection, declaring personal bankruptcy will stop the bleeding and allow you to begin rebuilding your credit rating once you are discharged from bankruptcy.

Considering the kind of protection filing bankruptcy in Canada can do for those burdened with severe debt, it is somewhat surprising that so many Canadians fear bankruptcy.

Many Canadians view personal bankruptcy as the end of the world.  As a result, they’ll do everything they can to avoid considering bankruptcy for as long as possible; often making their financial condition even worse.

If you’re on the fence about filing bankruptcy Canada, think long and hard about the protections provided to filers, speak to a trustee in bankruptcy and then decide what’s best for you.

About - David was initially drawn to accountancy because he was ‘good with numbers’. He has been an insolvency professional since 1993. Soon after he began to work with debt issues he discovered that the most satisfying part of his role was the ability to make a positive difference in other people’s lives. It is the person, not the numbers that continues to guide his approach toward helping others deal with debt issues.