We’re Here To Make Declaring Bankruptcy Less Painful

Client meeting with trustee; Declaring Bankruptcy in St. Catharines, Niagara, OntarioNo-one wants to go bankrupt. But, if you’re in over your head with debt and unable to manage it, declaring bankruptcy by talking to a bankruptcy trustee is the best way to get a new start.

Declaring bankruptcy is a legal process administered by a bankruptcy trustee, and, in Canada, is legislated under the Bankruptcy and Insolvency Act that will eliminate most, if not all, of your current debt. Collection agencies will stop incessantly calling, and creditors will stop pounding down your door. Wage garnishments will halt in place as well.

Declaring bankruptcy is a good way to begin the process of eliminating your mountainous debt, but it also has adverse side-effects. Bankruptcy can seriously hurt your credit score. Bankruptcy can also stay on your credit report for up 10 years. However, not filing for bankruptcy, and allowing your debts to go to collections, will also negatively impact your credit.

We’ve compiled an easy-to-digest outline of how to go about declaring bankruptcy, and what to do after you’ve been discharged.

Declaring Bankruptcy: The Process

Filing The Bankruptcy Paperwork

Filling out bankruptcy paperworkIf you’re looking to declare bankruptcy, your first action should be to contact a bankruptcy trustee for a free initial consultation. Not only will they help you to consider all of your debt relief options, they will discover ways to avoid declaring bankruptcy altogether. But, if it becomes clear that declaring bankruptcy is the only option to eliminate your debt, then you’ll need to fill out all the required paperwork.

Your bankruptcy trustee is responsible for administering all aspects of your bankruptcy, including paperwork. Once all paperwork has been signed, your trustee will electronically file the documents with the Office of the Superintendent of Bankruptcy. Your bankruptcy will begin immediately once the paperwork has been transferred, processed and filed.

All of the creditors with which you have debt will be notified that you’ve declared bankruptcy within five days, and it is then up to them to file their claim with your trustee for the amount they are owed.

Duties During Your Bankruptcy

Post bankruptcy checklistDuring the bankruptcy period you are required to do the following:

  • Provide the trustee with your tax information to file your outstanding tax returns, including the current year;
  • Submit each month copies of your pay stubs and proof of other income;
  • Attend two credit counselling sessions to help with budgeting, and help you get a fresh start at the end of the bankruptcy;
  • Make the required contribution (including surplus income payments) to your bankruptcy estate;
  • Surrender any non-exempt assets;
  • Complete any other duties requested by the trustee.

As long as you perform your duties during bankruptcy, you will be discharged and your debts will be eliminated. If you are not discharged, your debts don’t go away, which obviously defeats the purpose of declaring bankruptcy.

Receiving Your Bankruptcy Discharge

In most cases, as long as you perform your duties during bankruptcy, you will be discharged and your debts will be eliminated. If you are not discharged, your debts don’t go away, which obviously defeats the purpose of declaring bankruptcy.

You now have a chance to repair your credit. It’s simple, really. All you have to do is re-establish that you are a good credit risk.

Here are some tips to help you repair your credit score:

  1. Spend less than you earn: Live within your means and only spend money on what you can afford. Debt is caused by spending more than you earn. Don’t fall back into the same old habits.
  2. Track your moneyBudget, budget, budget! Make a list of your expenditures, and save receipts to refer back on. If you find you’re overspending, or could be spending less on certain items — adjust!
  3. Save moneyNow that you’re living without credit, saving up money is essential as an emergency fund. To rebuild credit, savings are important to use as a down payment or security deposit for future purchases.
  4. Pay all of your bills on timeHaving been discharged from bankruptcy, you no longer have monthly payment on credit cards or lines of credit to worry about, but you still do have rent, mortgage, hydro, transportation, etc. Be sure to pay off all of these monthly bills on time to help boost your credit score.
  5. Get a secured credit cardA secured credit card is one which you pay off to receive. In other words, you give the credit card company a $1000 up front, and they, in turn, give you a credit card with a $1000 limit. They are willing to do this as soon as you are discharged, because your credit limit is secured by your cash deposit. This works for credit repair after bankruptcy because the secured credit card is reported to the credit reporting agencies as a normal credit card, so it helps re-establish your credit. Pay the balance in full every month and your credit score will gradually improve.

If You Need To Consult With A Trustee About Declaring Bankruptcy, You Can Count on Crawford, Smith & Swallow Inc.

Once you start to realize that debt is becoming a burden and is consuming everything important in your life, taking immediate action is paramount to your quick return to financial stability.

At Crawford, Smith & Swallow Inc., it is our professional mission to tailor the appropriate financial solution to serve your immediate need.

Book a free consultation today!