Despite how important most of us know saving money is, many of us struggle to save. It could be because we forget or simply because we don’t have money left over after all of our expenses. This is especially a problem in places like Saskatchewan, where many people spend too much on rent when compared to income.
Having this much money going to rent can make staying afloat difficult. Many people will struggle enough that they will have nowhere else to turn other than bankruptcy. While extreme, sometimes bankruptcy is necessary to get a fresh start.
Will filing for bankruptcy affect your spouse?
What is Personal Bankruptcy?
Bankruptcy in Moose Jaw is a legal process in which a person will surrender many of their assets in exchange for their debts to become eliminated. There are some assets that can be kept, which will vary by province, but most must be surrendered to cover the outstanding debt.
Bankruptcy is designed to give someone struggling with debt a way out, while still making sure to treat the lenders and creditors fairly. Anyone in Canada can file for bankruptcy as long as their debts total more than $1000, and they are unable to meet their repayment responsibilities.
The only people in Canada that can administer bankruptcy and help you with the process are Licensed Insolvency Trustees (LIT). These experts are educated and trained individuals that will help you through the process and are the people whom you will surrender your assets to.
The Affect of Bankruptcy on Your Credit
Now that you’re aware of what bankruptcy is and how it works, how does a bankruptcy in Moose Jaw impact someone’s credit? Bankruptcy will be a large negative mark on your credit report. In Canada, all credit accounts are given a rating between 1 and 9. A 1 means you’ve paid off that account within the agreed-upon terms. While a 9 means that that account is part of a bankruptcy.
Therefore, all of your credit accounts that are part of your bankruptcy will be given a rating of 9. This bankruptcy will last on your credit report for six years after your date of discharge. When you have a bankruptcy note on your credit report, borrowing money affordably in any capacity will be difficult.
However, this damage to your credit doesn’t mean that bankruptcy is the wrong choice. Sometimes, it is better to start from scratch with a bad credit score than it is to continue to be stuck under a mountain of debt.
Rebuilding Your Credit Post Bankruptcy in Moose Jaw
If you have gone through bankruptcy in Moose Jaw and your credit is in a bad place, it can feel hopeless. However, it is important to remember that repairing and improving your credit is always possible, no matter how bad things may seem. Some tips for repairing your credit after bankruptcy include:
- Pay all of your bills on time and in full
- Use a secured credit card to build credit without the risk
- Check your credit report for errors
- Understand the other factors that influence your credit score
- Keep credit utilization low
- Refrain from constantly applying for new credit
However, don’t expect your credit to improve in a week. Improving your credit after bankruptcy is a process and it can take several months (or longer) to see some noticeable improvement. These aforementioned tips aren’t magic, and it can take a lot of hard work and dedication to repair your credit fully. But over time, you will see your score begin to improve and will realize that all of the hard work and sacrifices were worth it.
The Cost of Filing For Bankruptcy in Moose Jaw
While many may think that filing for bankruptcy in Moose Jaw is free, that is not the case. In Canada, there are three expenses that you need to beware of before filing for bankruptcy. Any assets you many lose, surplus income payments (if necessary), and finally the base contribution.
Base Contribution
The base contribution cost for bankruptcy is the exact same for everyone, and you will have to pay this no matter what. Base contribution is $1,800, which can be paid at $200 for 9 months or all at once. These costs are set by the government, so the particular LIT you work with won’t affect this cost
Surplus Income
There is also a chance you could be responsible for additional costs if you earn over a certain income. If your income is above the “surplus income” threshold, you will make additional payments. These payments can vary depending on the size of your family and of course, your level of income. So those who make more will generally pay more when it comes to filing for bankruptcy.
Assets You Lose
The assets that you lose can also be seen as a cost associated with bankruptcy. You will lose your tax return for the year, any RRSP contributions made in the year, not to mention many of the assets that you own. All of your investments will also be lost, so you will truly be starting over from scratch.
What Can and Can’t Be Included in a Bankruptcy?
But before filing for bankruptcy in Moose Jaw, you need to make sure that your debt is eligible to be included when you file for bankruptcy. Some may think that all debts can be wiped and eliminated via bankruptcy, but that is not the case. Knowing this is crucial when deciding whether bankruptcy makes sense for you or not.
Debts That Can Be Included In a Bankruptcy
- Credit card debt
- Unsecured lines of credit
- Medical bills
- Income and property tax
- Utility bills
- Unsecured loans and payday loans
Debts That Cannot Be Included In a Bankruptcy
- Most student loan debt
- Secured loans
- Child support
- Alimony
- Legal fines
- Debt you forgot to list in your bankruptcy filing
- Fraudulent debts
If you have some debt that you’re still not sure will be eliminated or not, be sure to ask your LIT. This should be done prior to deciding that bankruptcy is the option you want to go with.
Know Your Pre-Bankruptcy Options
While we have spoken a lot about bankruptcy in Moose Jaw and it is certainly the best choice for many consumers, it is not the first debt relief solution that you should look at. It is extreme, will follow you around for years, and should only be used as a last resort. Instead, there are several other options that should be considered before even thinking about bankruptcy.
Debt Consolidation Loan
Debt consolidation is all about consolidating your debts, which means you will take out one large loan, to cover and pay off all of your smaller ones. This can help you drastically lower your interest rates in many cases, as well as simplify your monthly payments. Both of these can make it far easier to keep up with your necessary payments every month.
Debt Consolidation Program
A debt consolidation program works similar to a loan, except instead of borrowing money to pay off your loans, you will simply pay your credit counsellor a lump sum every month, and they will make sure the right amount gets to the right creditor. This can lead to much less stress or worry, and potentially even more affordable rates in some cases. These programs will often include counselling and education, to help you better understand your situation and help improve your financial habits in the future.
Debt Settlement
A debt settlement is where you make an offer to “settle” with your creditors. So let’s say you owe $10,000, you could offer to settle the debt for $6,000. If the settlement is accepted, your entire debt will be forgiven without having to pay it all off. It’s important to make sure your offer is fair, or else the creditors will simply refuse it. Debt settlement in Moose Jaw can be a long negotiation, so having a debt settlement company in your corner is often a good idea.
Learn about how debt settlement will affect your credit.
Consumer Proposal
A consumer proposal is a legal process in which you will repay a portion of what you owe. You will make a proposal to your creditors where you will offer to pay back a portion of your debt, or ask for a longer time to pay back your debt. If accepted, you can generally save a lot of money, but make sure the proposal is fair, as it can be denied.
Once you’ve considered all of these options and come to the conclusion that they are not the best fit for your needs, it may be time to consider filing for bankruptcy in Moose Jaw. Of course, be sure to speak with a trusted financial expert or professional to ultimately decide which solution makes the most sense for your situation.
Looking For Bankruptcy Help in Moose Jaw?
If you are curious whether bankruptcy in Moose Jaw is right for you, or you have other concerns you’d like to voice, be sure to contact Loans Canada. We look forward to hearing from you and are confident that we can help you out.
