The decision to file for bankruptcy is a difficult one and it is advised to talk to someone about all of your options before you decide to file. There are many reasons people decide to file for bankruptcy such as a costly divorce settlement, medical bills that have piled up to failed small business. It is best to ask yourself several questions before making a firm decision. For instance, do I or we have large-scale debt? Do our monthly minimums take up all of our living expenses and more? If we do decide to file for bankruptcy, will we promise ourselves to change our spending actions? Do we want to buy a home in the near future?
If your debt in indeed out of control then it is important to be honest with yourself because the decision to file could, in fact, be a move towards integrity and a positive life change for you and your family. Filing bankruptcy is not for everyone and you do have options, so make sure you know all of your options in order to make an informed decision.
What Happens If I Lie To My Licensed Insolvency Trustee?
It is a statutory obligation for every person filing an assignment in bankruptcy to make full disclosure of all assets, liabilities, income and living expenses. As well, you must disclose information as to the disposal of any of your assets within the past 12 months (5 years if the asset is real estate). If you intentionally do not disclose significant information to your trustee, you will have your discharge from bankruptcy opposed by the trustee.
You might even be required to appear in court to explain why you did not disclose full and complete information. The court can impose penalties on you, depending on the significance of the non-disclosure. You should also be aware that you are asked under oath to swear that all of the information that you gave to the trustee is reasonable and accurate to the best of your knowledge and belief.
Swearing a false affidavit is called “perjury” and now you may be charged under the Criminal Code as well as under the Bankruptcy and Insolvency Act. Not a good situation to find yourself in when you are already stressed out over your debts.
Good Debt: any money borrowed to buy an appreciating asset where the cost of servicing the loan does not affect your ability to save to the appropriate level & where the principal will be fully repaid before your retirement
Bad Debt: Everything Else
In sum, divide bad debt by your annual income and if that percentage is over 25%, it is time to make larger payments to reduce this number and make sure you also keep good debt at a minimum.
Ok, so your financial life is in the toilet. It could be the result of illness, job loss, a disaster of some kind. Whatever the reason you still have your family and your mind. Of course, there are the emotional issues of filing a debt consolidation proposal or bankruptcy. Treat the emotional issues as an advertising issue. All of the banks, financial institutions (visa, mastercard etc.) have been telling us that we should pay our debts. Yeah! Right! What they want is for us to pay the minimum monthly payment so it takes us thirty years to pay the debt. We pay interest until we are old and grey- assuming we never have an emergency and have to charge anything during those thirty years. The law (Bankruptcy and Insolvency Act) is meant to help an unfortunate debtor who is in debt over their head to be absolved of most (if not all) of their debts so that they can rebuild their lives. I do not mean to imply that bankruptcy is a simple process, it is not. But it is not as hard as you might have heard. In the majority of bankruptcies you get to keep your clothes, furniture, car and, yes, even your house. Your employer is informed of the bankruptcy only if there is a garnishee on your paycheque. The garnishee is stopped by the law but the letter from the trustee that stops the garnishee unfortunately tells the employer what is going on.
Many trustees offer a free initial consultation. If you feel that you are in financial trouble take advantage of this. At this first meeting bring a list of your assets and liabilities as well as a list of all of your questions. Remember, there are no silly questions- ask everything. If there are alternatives to a bankruptcy (such as a debt consolidation proposal) your trustee will discuss them with you. As you proceed through the bankruptcy your trustee and his administrators will guide you during the process. When you are discharged from your bankruptcy you will continue to receive help in rebuilding your credit rating and in obtaining a credit card.