There are three essential facts you need to know before you decide to file for bankruptcy in Canada. The first is you need to know where your money goes each month (from your budget). Then you need to know what you own, and what you owe. In this article we will discuss what you own (your assets).
An asset is something of value you own. Get a piece of paper and make a list of everything you have that you could turn in to cash. To keep it simple, only put items on the list that you could sell for more than $100. (Yes, your old pair of jeans may have value, but there’s no need to list something that can’t be sold for much money).
Include the obvious assets like your house and your car. Also include your RRSP, RESP, and any other investments you have.
Once you have a list, write a value beside each item. The value should be what you believe you could sell the asset for.
For example, you may be able to sell your house for $200,000, but if the mortgage is $190,000, by the time you sell your house and pay the real estate commissions, legal fees, and the penalty to break the mortgage you will probably end up with nothing, so on your list beside your house you would write “0”.
Now that you have a list of assets, ask yourself this question:
If I sold my assets, could I generate enough money to repay all of my debts?
If the answer is yes, you could avoid bankruptcy by selling your assets and using the money to repay your debts. Of course if you sold your house and your car you would need to find a place to rent, and find a way to get to work, so obviously those are considerations. However, for this step in the analysis, you are simply trying to determine if it’s possible for you to avoid bankruptcy.
If it’s not possible to sell your assets to pay off your debts, the next step will be to take a detailed look at your debts.