Advantages:
- Generally, it is the least expensive and the fastest method of eliminating your unsecured debt.
- It provides an immediate “stay of proceedings” that prohibits your unsecured creditors from commencing or continuing any collection action or legal action for the recovery of a debt.
- It immediately terminates all telephone calls, past due or collection notices, and legal action to garnishee wages, seize bank accounts or seize unencumbered assets.
- All your unsecured creditors must communicate directly with your Trustee.
- It protects your wages, bank accounts and all of your unencumbered assets.
- It provides immediate debt relief and stress reduction.
- Your unsecured creditors are legally required to accept your bankruptcy.
- There is no voting process required to gain acceptance of your bankruptcy by your unsecured creditors.
- None of your unsecured creditors can “opt out” or ignore the bankruptcy.
- The amount you owe has no bearing on the cost of filing bankruptcy. The amount you are required to pay your Trustee in a personal bankruptcy for the benefit of your creditors is based on your household income and the number of members in your household.
- The bankruptcy is usually completed in as little as nine (9) months and you receive a fresh financial start.
- Eliminates most of your unsecured debts, including government debts for income tax and good and services tax (“GST”).
- There is no requirement for you to know exactly how much you owe to each of your unsecured creditors.
- Everyone that files bankruptcy is treated the same. The Bankruptcy and Insolvency Act is a federal act and applies equally across Canada.
Disadvantages:
- It negatively affects your credit bureau report and remains on your credit bureau report for six (6) years from the date of your discharge from bankruptcy.
- Non-exempt assets must be surrendered to your Trustee or you may repurchase them from your Trustee at auction value.
- Income tax refunds for the year you declare bankruptcy, plus any prior year’s income tax refunds that remain outstanding, are provided to your Trustee.
- Monthly income and expense statements must be submitted to your Trustee throughout the period of your bankruptcy.
- All credit cards must be surrendered to your Trustee for cancellation.
- You are unable to be an officer or director of a corporation.
- You must disclose the status of your financial situation if you enter into a business transaction.
- You will be unable to borrow money without first disclosing to the credit grantor that you are bankrupt.
These are some of the advantages and disadvantages of bankruptcy. To determine whether a personal bankruptcy, a consumer proposal or other debt restructuring plan is appropriate for you, call Faber today to schedule your free, confidential, no obligation consultation. We would be pleased to meet with you in person to review your financial situation and discuss with you all options available to you to eliminate your debt and provide you with a fresh financial start.
Thank you all for making a not so happy time a positive learning experience.
Kelvin & Deb J.