When Should You File for Bankruptcy in Alberta?

When should you file for bankruptcy? This is one of the questions Rhonda Fox-Miles gets the most. If you have the same question, you aren’t alone. And today, we’ll help you find the answers you are looking for.

It’s no surprise this is such a common question. After all, average consumer debt in Edmonton was already the highest in the country before the Coronavirus pandemic. Resulting financial pressures have put many people over the edge.

Now, they’re left wondering what to do next and if bankruptcy is the right option for them.

WHAT IS BANKRUPTCY?

Bankruptcy is an insolvency process under federal legislation with contributing provincial laws. 

The court of queens administers it to get you a fresh start with your finances. At the same time, it offers the help of learning to identify the risk factors that lead to bankruptcy and how to prevent a future bankruptcy.

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When should you file?

What are the benefits of bankruptcy?

  • Bankruptcy provides an automatic stay. All creditors receive notification, and it halts all actions against you when you file for bankruptcy. Lawsuits, wage garnishments, and collection calls all stop. (Click here to understand your rights with wage garnishment in Alberta)
  • You have protection. The Bankruptcy & Insolvency act protects you by the terms and conditions of the act. All parties are on an equal playing field.
  • Bankruptcy clears unsecured debts. All your unsecured debts are dealt with during a bankruptcy, minus a few exceptions. This includes credit cards, tax debts, payday loans, lines of credit, and unpaid bills. (To learn about the difference between secured and unsecured debt, take a look at this post)

When should you file for bankruptcy? 

The truth is, bankruptcy isn’t the right choice for everyone. That being said, there are plenty of situations when filing for bankruptcy is the best choice for moving forward. 

Here are a few questions to ask yourself if you’re wondering whether you should file for bankruptcy. Depending on your answer, bankruptcy might be right for you. 

Are you having trouble making payments? 

If you’re struggling to make your payments when they’re due each month, this is one sign bankruptcy might be a good option for you. Credit cards, car loans, mortgage payments, CRA tax debt, business debt are just some of the types of debt bankruptcy we can help you navigate.

Are creditors harassing you? 

Bankruptcy helps to deal with creditors by placing a stay of proceedings on collections, which stops collections and provides immediate relief to your monthly debt obligations.

Feeling stressed? 

When in financial difficulty, the amount of stress that builds up over time can seem inescapable. It has a way of affecting all aspects of life, from your business to your personal relationships. 

Because bankruptcy helps alleviate the burden of debt while providing a structured financial solution, it makes a fresh start possible for people experiencing money stress.  

Many people find their stress levels decrease significantly when they decide to go bankrupt. 

Because of bankruptcy, they no longer have the burden of dealing with the daily stress of their debts. Instead, the licensed insolvency trustee under the authority of the Bankruptcy and Insolvency Act of Canada takes charge.

Who can file for bankruptcy in Canada?

Now that we know some signs bankruptcy might be your next best move, let’s talk about who can file for bankruptcy in Canada. 

Here’s what you need to qualify for a bankruptcy declaration: 

  • Owe more than $1000
  • You are insolvent (this means you are unable to pay your debts as they become due)
  • Live or do business in Canada
  • Have more debts than assets

With the economic uncertainty people are experiencing due to COVID-19, there will be many people one or more of these points applies to. As a result, many people will turn to a trusted professional to help get them back on their feet.

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Are you ready to talk more about when you should file for bankruptcy? Are you looking for family-friendly, non-judgmental insolvency, bankruptcy, and credit counselling services to help you through difficult times? We are here for you. Contact us today to schedule your free consultation and let’s figure this out together. 

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