Sometimes it can be the smartest way out

Sometimes debt can become so overwhelming and so unbearable that you feel it will take a lifetime to get yourself back on track. When your income is mainly going towards servicing your debt and you don't believe you can service the payments through a consumer proposal, it might be a viable solution for you.

It is imperative that you understand the process of bankruptcy, the requirements, and the affect it will have on you now and down the road. We will answer any questions you have and dispel any myths you may have heard to determine if this is the best option for you.

Deciding to go through the bankruptcy process is not an easy one and we aim to make it as smooth and straightforward as possible. 4 Pillars will walk with you every step of the way and ensure we work to protect your assets when possible and advocate for you.

Continuing beyond the bankruptcy process is 4 Pillars budgeting and credit rebuilding services. These services are included and available to our clients that decide to file for bankruptcy in order to help you rebuild your credit and secure your financial future.

Things to consider when filing for Bankruptcy 

It is required that you attend two financial counselling sessions. These sessions will help you to understand some of the causes of getting into severe debt and what you can do in the future to help manage your finances.

  • You will need to submit proof of income each month
  • You will not receive any GST cheques during this period
  • Declaring bankruptcy remains on your credit history for 6 years from date of discharge as an R9
  • You may lose any tax returns you were expecting
  • You will not usually be eligible for credit until you have been discharged from bankruptcy
  • You cannot be a director of an incorporated company during bankruptcy
  • Child support or alimony must still be paid
  • You cannot decide which debts to pay
  • Secured debt like a car loan or a mortgage is not included in your claim
  • If your student loans are within 7 years from the end of study they will survive the process
  • If you are filing for bankruptcy for the first time it can be between 9 and 21 months and up to 36 months for the second time
  • Certain assets based on Provincial legislation will be exempt from seizure

Through this process, you must give “Full Disclosure” of all your income and expenses, assets, liabilities, and any business holdings as part of the bankruptcy process.

In 2015, 121,609 Canadians either filed for personal bankruptcy or a consumer proposal. Bankruptcy really is a last resort and the most severe type of debt restructuring.

Benefits of Filing for Bankruptcy

  • All wage garnishments will cease
  • You can start to rebuild your credit once you have been discharged from bankruptcy
  • There will be no interest accumulating once bankruptcy has been filed
  • Creditors and Collection agencies are not permitted to contact you
  • Eventually you will be able to build credit again, it will just take time

For some, there is no other way to get out of debt and this may be the only option. If bankruptcy is how you choose to restructure your debt, it is filed under the Bankruptcy and Insolvency Act with a Licensed Insolvency Trustee (LIT). When you declare bankruptcy your assets are given to a LIT who then sells them and distributes the money to your creditors, they will also determine how much surplus income you pay each month and how long you are in bankruptcy. You are entitled to your own dedicated representation through the process if you desire. 4 Pillars is not a LIT and works solely for the benefit of you, the debtors.