Bankruptcy may be considered the “easy way out” by anyone who doesn’t work in the debt relief industry or has never had to file a personal bankruptcy. For Licensed Insolvency Trustees and debtors who have filed a personal assignment in bankruptcy, we understand the decision isn’t taken lightly. Many debtors struggle for far too long to avoid the perceived embarrassment of bankruptcy.

woman analyzing finances on computer

If you answer yes to the following questions, now is the time to consider if bankruptcy is the right solution for you: 

  • Do you borrow from one credit card to pay another?
  • Do you have a garnishment of your wages?
  • Do you continually exceed your limit on credit cards?
  • Are you using credit cards for necessities of life (food, clothing, etc.)?
  • Do you only pay the minimum payment toward your credit card balances?
  • Are you receiving telephone calls from collection agencies?
  • Are you being harassed by creditors for payments?
  • Are you cashing in RRSPs or selling assets to make debt payments?
  • If you were to liquidate your non-exempt assets (i.e. house, savings), would you be unable to pay your debt in full?

Making the minimum payments toward debt may maintain your credit rating, but the balance owing will not be reduced and may actually increase depending on the interest rate. Your credit card statement should disclose how long it will take to pay off the debt if the minimum payment is made. You may be shocked to find out your debt will not be reduced in the next ten years even after all the payments you have made.

Related Article: What happens if I can no longer pay my consumer proposal?

Before you continue to make only minimum payments, struggle through a garnishment, or cash RRSPs to pay debt, contact us for a free, initial assessment to review your financial situation in detail and explore if bankruptcy is the best solution for you.

Kathy portraitBy Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency
and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)