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Recent studies show that PEI currently has one of the highest levels of debt in the country. With most of the province’s residents situated in Charlottetown, the city is sure to hold a large percentage of that debt. Therefore, a plan has recently been set in motion to balance the island’s provincial budget and debt levels are expected to lower within the next few years. That said, there’s a big difference between the amount of debt your city carries and the amount you’re carrying.
When your own level of consumer debt has become too much to manage with conventional methods, it might be time to consider filing for bankruptcy in Charlottetown.
In a sense, yes, much of your consumer debt can be eliminated when you declare personal bankruptcy in Charlottetown. Essentially, the process involves filing a legally binding document that allows you relief from any unsecured, as well as any wage garnishment, late penalties, and other collection efforts brought down by your creditors.
Bankruptcy proceedings can only be administered by Licensed Insolvency Trustees, who are court-appointed employees regulated by the Bankruptcy and Insolvency Act of Canada. These trustees can be found throughout Charlottetown and their job is to help borrowers file both consumer proposals and bankruptcies, as well as to negotiate with creditors and ensure that all parties involved are treated with fairness.
Nonetheless, while you’ll be free from your consumer debt and the reaches of your creditors, your overall debt problems will not simply disappear. In fact, bankruptcy can have a profound negative effect on your finances and credit which, if handled irresponsibly, can leave you with even worse debt issues than before.
For a more detailed article concerning the Bankruptcy and Insolvency Act, click here.
In addition, only certain kinds of debt can be included within the bounds of bankruptcy in Charlottetown, namely those that are unsecured and not tied to any collateral.
When you apply for new credit, you’re usually given the option of offering your lender temporary ownership over one of your assets, such as your house or car. The asset is used as security to lessen the risk for the lender, which is common for more expensive loans and products. As a result, you can access a larger amount of credit with a more affordable interest rate, since your lender has something to sell to regain part of their loss in the event that you default. The only problem is, secured debts, as well as many legal and government debts, cannot be included during a bankruptcy.
Check this out for a more detailed explanation of secured and unsecured debt.
Below, we’ll demonstrate a few examples of each kind of debt so you’ll have a better idea of what does and doesn’t qualify for bankruptcy.
Qualified Debts:
Unqualified Debts:
There are two legally binding debt relief solutions that you can choose from. The one you may have heard about more often is, of course, bankruptcy. However, the option that you might not have heard about as much is a consumer proposal.
Does the federal government provide debt relief? Find out here.
Although both options are similar in that they’re meant to clear the unsecured consumer debts and collection penalties against you, and can only be conducted by a certified Insolvency Trustee, they are quite different in their overall results.
A consumer proposal is different because:
Can I pay off my consumer proposal early? Find out here.
Bankruptcy is different because:
Want to know what will happen to your house during a bankruptcy? Read this article.
Although bankruptcy can certainly get you out of debt, the reality is that it can also have a very harsh impact on your financial profile, particularly when it comes to your credit. Not only will obtaining new credit be more or less out of the question until your discharge is official, but it can also take a ton of credit improvement before any creditor will trust you with their money.
Don’t worry, if your bankruptcy is complete and you’re ready to recover from it, there are plenty of ways to do it, although a lot of effort is essential on your part. Some basic credit improvement methods include but aren’t limited to:
How much does it cost to declare bankruptcy in Charlottetown? Click here.
Apply for a secured credit card – A product available to those with bad credit, these cards require a security deposit (equal to your credit limit) to be activated. You can then spend time making payments on time and in full, which will slowly elevate your credit score. When you pay your full balance and cancel the card, your deposit will be refunded.
Monitor your credit report consistently – Once your secured credit card is registered, your progress will be reported by the lender to Canada’s credit bureaus (Equifax and TransUnion). You can then request a copy of your credit report from either bureau (we suggest both) and track your progress. The first copy you request each year is free.
Dispute errors, fraud, and identity theft – When you look at your credit report, it’s extremely important to check it for any mistakes or inconsistencies that could hurt your credit score. This might be information that wasn’t reported properly or even something as simple as your name being misspelled. However, the worst case scenario is that you’ve been subject to fraud or identity theft, wherein fraudulent accounts were opened in your name or random charges were made to them that you have no recollection of. Either way, be sure to dispute the error with both credit bureaus. If you can prove that it’s not your fault, the problem will be quickly rectified.
Remember, bankruptcy is meant to be a last resort when you’ve exhausted all other resources. So, if you’ve talked through your situation with a financial advisor and determined that bankruptcy is not actually your best option, you can start looking into some less drastic alternatives, such as:
Whether you’re about to file for bankruptcy in Charlottetown, are currently recovering from one, or would like to avoid the process altogether, you can rest easy knowing that Loans Canada is here with a helping hand. Contact us today!
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