While many parts of Canada have experienced a growth in net worth over the last few years, Quebec has been stagnant in that regard. While the average debt is lower than many other large cities, that doesn’t tell the whole story.
Just because the average person in Montreal has a manageable amount of debt, doesn’t mean that there aren’t people struggling to get by. There are plenty of people struggling to make debt payments and need help from outside sources.
Thankfully, Canada is home to many debt relief options to help those who are struggling. One of these options is bankruptcy. Keep reading for everything you need to know about bankruptcy in Montreal Quebec.
When is Bankruptcy the Right Choice?
While filing for bankruptcy is a way out of debt, it should not be the first one you consider. Bankruptcy is serious and will cause you to potentially lose some of your belongings. Before bankruptcy, there are other options you should consider first such as debt consolidation, credit counselling, and debt settlement.
These are less serious and are a logical first step to consider before going straight to bankruptcy. With that in mind, there are a few situations where filing for bankruptcy in Montreal is the best first step for a consumer in debt.
- When you have exhausted other debt relief options and bankruptcy is the only one left
- When you simply will not or cannot earn any more money to put towards your debts
- When you can no longer keep up with loan payments
- When all of your loans are in default
Of course, deciding that bankruptcy is the right choice, you should speak to a licensed insolvency trustee who can go over your financial situation and see what would work best for you.
How Does Bankruptcy Affect Your Credit?
One of the most common questions surrounding bankruptcy is how much will it affect your credit? The quick answer is that it will affect your credit a lot. When you apply for bankruptcy in Montreal Quebec, a note will appear on your credit report that you have done so.
A bankruptcy will remain on your credit report for a total of six years after your date of discharge. So if you are bankrupt for 9 months (which is the minimum period for a bankruptcy), it will appear on your credit report for nearly 7 years. Of course, this is only for a first-time bankruptcy. If you file for bankruptcy a second time, it will appear on your credit report for a grand total of 14 years.
Read this to see how much it costs to file for bankruptcy a second time in Canada.
In addition to being a black mark on your credit report, a bankruptcy will also affect your credit rating and credit score. In Canada, we use a credit rating scale between 1 and 9. A rating of 1 would mean the individual has perfect credit and a score of 9 being the worst. If you have a bankruptcy, your rating will be a 9, which will make borrowing money extremely tough and/or expensive.
While bankruptcy in Montreal can be very harmful to your credit, sometimes it is the best and only option you have. Sometimes it is better to start fresh and begin to rebuild your credit over time than it is to continually miss payments and struggle. Of course, this is ultimately for you to decide what you would like to do.
Want to know what else affects your credit score? Click here.How Much Does it Cost to File for Bankruptcy in Montreal?
While bankruptcy is a very helpful service that thousands of people use every year, it is not free. Most people in Montreal and the rest of Canada will pay a minimum for $1800 for their bankruptcy. The base fee is $200 a month and a typical bankruptcy lasts a minimum of 9 months.
However, the actual amount you will spend on bankruptcy will depend on a number of things including how much you make, the assets you have, and the size of your family. There is a “surplus income threshold” that if you exceed you will likely pay more during your bankruptcy compared to those who make less.
Also, while it is not a direct monetary cost, you have to account for the assets you will lose in bankruptcy. You will not end up losing all your assets, but depending on their value you may need to prepare to surrender some.
Click here for more information about the costs of a bankruptcy filing.
The Right Bankruptcy Solution For You
Think that filing for bankruptcy in Montreal is the right option for you? If so, be sure to reach out to Loans Canada and we are confident we can help!
