“Bankruptcy is a form of insolvency and is normally only suitable if you can’t pay back your debts in a reasonable time. Assets you own, such as your house or car, will usually be sold to pay off your debts. This means if your assets are worth more than your debts, or if all of your regular payments are up to date and you can afford to keep paying them, bankruptcy is unlikely to be the best option for you. Going bankrupt will help you wipe the debts that you are unable to repay. People often associate a fresh start with bankruptcy, this is not strictly true. It is a fresh start subject to the consequences that come with bankruptcy. It is important to realise this.”
So, you’ve decided that the best way to solve your financial problems is to file for bankruptcy. It was a tough decision, but you don’t see any other way out…
Before declaring bankruptcy in Canada here are 5 things that you should do:
- Change your bank accounts. This is something we recommend all of our clients do before bankruptcy. The reasons are straightforward – if you have any debt or credit (loans or overdrafts) with your current bank they may close your bank account a soon as they receive notice of your bankruptcy. It is far better for you to make the decision and plan for the new account, than to find out your old bank is no longer honouring your payments for your mortgage, rent, car, insurance, etc. Even if you don’t have any outstanding amounts owing with your bank, the other people you owe money to may have been authorized to make automatic withdrawals from your account. These withdrawals should stop once you file bankruptcy, but if they don’t you may suddenly find yourself with no cash in the bank.