The Canadian and global economies have not had their best days in recent years. Many families are struggling financially and trying to find solutions to their problems. For some, the best solution is the declaration of bankruptcy. However, the myths surrounding bankruptcy make this practice less popular among citizens. Here are some myths:
- If you go bankrupt, it will be made public.
Usually, nobody will know about your bankruptcy unless you share this information. Research in public archives costs money and many people will not want to spend that amount. In addition, note that newspapers only publish cases of bankruptcy involving large national or multinational companies.
2. You will lose all your assets and become homeless.
If you declare bankruptcy, you will have to liquidate some of your assets in order to pay your creditors. However, in the majority of cases, you may be able to keep certain specific assets such as your RRSPs or Registered Retirement Income Funds, as well as your automobile or pet. Do a search for the applicable laws in your jurisdiction in order to keep as many assets as possible.
3. The process is easy and free.
The declaration of insolvency is not an easy or gratuitous process. In fact, the entire process can take up to 21 months and during this time you will need to consult a financial advisor, complete financial reports and transfer the management of your finances to the hands of a trustee. Also, the cost of the process can be as high as $ 1500. Therefore, no one should take the insolvency declaration lightly.
4. Your credit score will be ruined forever.
Bankruptcy will no doubt affect your credit score. Any creditor will be able to see the bankruptcy declaration on your financial statement. However, this information will not remain on the statement forever. After 6 years, the bankruptcy declaration disappears from your financial statement and the creditors will no longer be able to see this information. From that moment on, you can easily start rebuilding your credit score.
5. Your bankruptcy declaration will affect your spouse’s credit.
Many people adhere to the false belief that a spouse’s declaration of bankruptcy affects the other’s credit rating. The declaration of bankruptcy affects only the person who does it. Thus, your spouse will be affected only if he or she has co-signed a loan with you. However, your spouse’s individual assets will not be affected in any way.
6. If you declare bankruptcy, all your debt is liquidated.
People have the tendency to believe that the declaration of insolvency automatically involves the liquidation of debts. But, unfortunately, this is not true. When a person declares bankruptcy, they are still responsible for paying off or paying debts such as student loans, alimony, etc.
The declaration of bankruptcy is a long and laborious process. If you consider doing so, be sure to do so with all the necessary information. Forget these myths, mentioned above, and do an exhaustive search for the laws applicable to bankruptcy in your jurisdiction. Also, remember that creditors like to lend money to individuals released from insolvency because of the diminished debt of these individuals. For more information, please visit this page. Finally, do not forget the benefits that a loan can have on rebuilding your credit.