Unfortunately, bankruptcy is a reality for many businesses and individuals. Although the prospect of bankruptcy is alarming, it needn’t be completely overwhelming. Being aware of the process will give you a peace of mind. It will also help you feel confident facing your financial dilemmas.
To be insolvent means you are no longer able to pay debts. If such is the case, you’ll probably want to declare bankruptcy. Here are things to be aware of when going through a personal bankruptcy:
- Different debts are treated differently in bankruptcy: some debts are discharged once you declare bankruptcy. Other debts (alimony and child support) cannot be discharged.
- Some assets can be retained after filing for bankruptcy. People make the assumption that all assets will be taken away when bankruptcy is declared. This is untrue.
- Bankruptcy remains on your record for up to seven years. You should not take the notion of bankruptcy lightly. Another thing to be aware of is that Equifax and TransUnion generally keep your bankruptcy on file for six to seven years, depending on which province you live in.
- Bankruptcy remains on your permanent record. Even after your bankruptcy is discharged, it will remain on your credit score for several years. If asked, you will need to disclose your bankruptcy for the rest of your life. The good news is, you will be able to rebuild your credit over time.
- Credit can be rebuilt after bankruptcy. Once your bankruptcy has been discharged, you will be offered credit again. Because you will be in the rebuilding stages, you might not be offered the best rates. While this may be discouraging, remember that it’s designed to let you start over and do it the right way this time.
While you may be losing assets along the way, remember that bankruptcy is a fresh start. The process of bankruptcy allows you to have an opportunity to gain valuable skills and start on a new path—the path to financial success. You can trust Faber as your bankruptcy professionals. Call us any time to schedule a free, initial consultation with a licensed trustee.