At the end of the day, determining which debt relief option in Canada is right for you depends largely on the options for which you actually qualify. For instance, there is no point in pursuing bankruptcy or a consumer proposal if you owe less than $1,000 to your creditors because there is no chance you will actually be able to complete a proposal due to its $1,000 minimum debt requirement.
If you want to consider seriously whether personal bankruptcy is a viable option for helping you to get out of debt, then you must know what it takes to qualify for bankruptcy. Everyone who wants to file bankruptcy must meet the following qualifications no matter the reason why they have gotten into so much debt that bankruptcy seems to be their only solution.
Many debt relief options such as consumer credit counselling do not require you to have a minimum level of debt before you can enroll for assistance. With bankruptcy, however, there is a minimum level of indebtedness that you must reach before you qualify. It might surprise you to find out that the minimum required debt to file for bankruptcy is actually quite low. You can file for bankruptcy if you owe as little as $1,000 to your creditors. Whether you SHOULD file with such a small debt load is another question.
Unlike a consumer proposal, which does not take the value of your assets into account, the worth of your property is also a special consideration when it comes to determining whether you will qualify for bankruptcy. If your tangible assets are valued higher than the total debt that you currently owe your creditors, you will not qualify for bankruptcy. That is because your bankruptcy trustee will look at your financial situation and order you to sell some of your assets to raise the funds needed to pay your debt.
That doesn’t mean you can file for bankruptcy without any financial cost. You will still have to hand over what you do own to your bankruptcy trustee in order for your creditors to receive some of what they are owed even if they will not get the full amount you borrowed from them. There are exemptions that allow you to keep some of what you own, but you will still have to surrender a lot. This is one of the key differences between a consumer proposal and bankruptcy because you never have to surrender any assets when your consumer proposal is accepted by your creditors.
Finally, you will not qualify for bankruptcy unless your income is insufficient to cover all of your monthly debt payments. On the other hand, being unable to make your debt payments may not be a good reason to file for bankruptcy. You may first want to try another debt relief option such as debt consolidation that will not harm your credit like bankruptcy does.
Don’t Forget to Consider Debt Settlement
Speaking of debt relief options that are not as harmful to your credit as bankruptcy, you will certainly want to look into credit counselling and debt settlement . To find out more about your options, fill out this Canadian debt relief form.
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