3 Reasons Why Declaring Bankruptcy Could Be The Right Thing To Do
Bankruptcy has always been looked at as a bad decision by many. It, therefore, has negative perceptions associated with it. People tend to look at it as something that tarnishes your credit score significantly. Moreover, it will continue to appear in your public record for 10 years after filing. It also leaves you with a considerable amount of debt that will never be paid off. Naturally, these factors have led to people looking at bankruptcy in a negative light.
However, filing for bankruptcy in Canada, may not necessarily be a bad thing. It can, in fact, save you from a lot of financial hassles later on. Read on to find out 3 reasons why declaring bankruptcy might work for you.
1) Provides an Opportunity to Start Over
Sometimes, no matter how hard you try, either you end up messing things up or the people around you do the honors for you. In case of debt payments, there can be a lot of factors that may have propelled you to opt for bankruptcy. It could have been a sudden layoff from your well-paying job, an unforeseen accident of the sole breadwinner of the family, or merely a wrong estimation of your payment capacity at the time of taking a loan. Whatever may be the reason, filing for bankruptcy gives you a chance to sort out your finances. It gives you the opportunity to start afresh. You will have more cash flow to be able to make ends meet and, in the process, begin rebuilding your credit.
2) Prevents Foreclosure Proceedings
Filing for bankruptcy can be a good move, if you have been hounded by calls from creditors. The moment you file for bankruptcy, an automatic ‘stay of proceedings’ is generated. This prevents your creditors from repossessing your property, or enforcing any court action without the permission of the Bankruptcy court. This holds true even when the bank tries to foreclose your home. Filing for bankruptcy in Canada will put a stop to any foreclosure proceedings.
3) All Unsecured Creditors have to be a Part of the Bankruptcy Process
When you file for bankruptcy, all your unsecured creditors will have to mandatorily be a part of the process. This wouldn’t have been the case if you opt for debt settlement programs or debt management plans. Creditors can refuse to participate in informal debt settlement plans and then the entire plan falls apart. But when you declare bankruptcy, they are left with no choice but to adhere to the terms of the Bankruptcy Court in Canada.
Filing for bankruptcy can be advantageous or disadvantageous depending on your financial situation. Every case is different from the other and whether you should file for bankruptcy or not needs to be decided based on the merits of your situation. Consult with a legal expert to get a more accurate evaluation of whether filing for bankruptcy in Canada is the right thing for you to do.