How to Know When You Need to File for Bankruptcy

If you are drowning in debt, you know what a struggle it can be. As the bills keep rolling in, you are barely keeping your head above water. You’re not alone in facing financial woes. Don’t beat yourself up over the situation. Loss of a job, unexpected expenses, and high-interest rates could make it difficult for you to resolve your debts. 

You may wonder if it’s time to file for bankruptcy. Bankruptcy may look like an easy way out but it will have a major impact on your credit history that will last for years to come. Consider the following guidelines before you make such a major decision.

Debt Collectors Have Garnished Wages

If your debts are so out of control that bill collectors are taking money directly from your paycheck, you are in serious trouble. After they take their share, you may not have enough left to survive. This could be the time to absolve your debts.

You’re Using Credit Cards to Make it Day to Day

Credit card day to day

Credit cards are not meant to be your only source of income. You know you’re facing a financial crisis worthy of bankruptcy if credit cards are the only way you can manage to fill your car with gas, put food on your table, or pay your utility bills. 

If you are taking out more and more credit cards at staggering interest rates, you’ll only dig your way deeper into the hole of debt. When the credit card bills arrive, how are you going to pay them?

You’re Afraid You’ll Lose Your Essential Assets

When the ocean of debt grows so big you can’t see an end in sight and the bill collectors are circling around you like sharks, bankruptcy may be the only thing you can do. This especially holds true if you own important assets. 

Your home, your vehicles, a camper, and anything you have of great value could be seized in order to pay off some of your creditors. If you want to hold on to what you have, consider eliminating your burden of debt.

You Have Medical Bills that Weren’t Covered by Insurance

While most of your healthcare is covered by the taxes you pay in Canada, there are some bills that you will have to take care of on your own, such as vision care and major dental work. Add visits to the podiatrist and the chiropractor to the list of your expenses. 

These expenses may have been necessary for your well-being. However, they can add an overwhelming weight to your shoulders if you are already facing financial challenges. Bankruptcy can help you to find financial relief.

You Have Nothing in a Savings Account

savings

A savings account is one of the first places creditors will look to get compensation for debts. If you have nothing saved up in the bank, they’ll be out of luck. Bankruptcy will keep them from hounding you anymore.

Talk with Licensed Trustee to Get Advice

Don’t make any hasty decisions when it comes to filing for personal bankruptcy. A licensed trustee can work with you to review your financial situation. The next step will be to look for a solution that is tailored to you. Debt solutions are not one-size-fits-all. 

A consumer proposal in Alberta, for example, or wherever you reside, maybe the answer for you. Your trustee may be able to file a proposal that will provide you with protection from bill collectors. The next step will be to negotiate new payment terms with your collectors. You’ll pay them less money, cutting your debt down to a more manageable size. Other advantages of a consumer proposal include:

A consumer proposal offers you light at the end of the tunnel of debt.

Right now, it may look like there is no way out of your debts. Turn to an expert to learn about ways you can handle your financial problems. You may be able to work with your creditors and a trustee to establish one lower payment a month that will not change. Otherwise, bankruptcy could help you to breathe easy again.


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