Are credit counselling and bankruptcy the same thing?
asked November 21, 2017 by Anonymous
Are credit counselling and bankruptcy the same thing? If I enroll in a credit counselling program, does that mean I’m filing for bankruptcy? What’s the difference?
Credit counselling and bankruptcy are not the same thing. Each option can help you with your finances, however, they do not entail the same steps.
First of all, credit counselling involves the help of a financial professional. You and a credit counsellor sit down together to evaluate your budget. The counsellor can devise a long-term plan to get out of debt for good.
With counselling, there is no obligation to move forward with the plan. Without the commitment, there is no guarantee you will get out of debt.
Learn more about credit counselling here.
Bankruptcy is a legal process a person enters into when they can no longer pay their debts. The person’s debts are wiped out (with restrictions), but their assets are subject to seizure in exchange.
It entails engaging with a Licensed Insolvency Trustee. Bankruptcy is a lengthy process and can affect your credit for up to seven years. Of course, it’s a long-term commitment that comes with many consequences.
As such, consider it as a last resort. You can learn more about bankruptcy here.
answered 2 years ago by Debt.ca Staff