Before you decide to file for bankruptcy in Canada, make a household budget. Why? Because you need to know where your money is going — it may be possible to avoid bankruptcy.
A budget does not need to be complicated. If you know how to use a spreadsheet on a computer, great. (You can get a free, one-month trial of Calendar Budget, an easy to use on-line budgeting tool). If not, simply take a piece of paper and write down everything you spend money on each month. It’s easy to remember what you spend on your monthly expenses that are the same each month, like rent; it’s more difficult to add up expenses that change each month.
If you pay by debit or credit card, review your bank or credit card statements for the last few months to estimate what you spend. If you pay cash, carry a pencil and paper with you for the next two weeks and write down every penny you spend. That will give you a good idea of where your money goes.
Once you have a budget (a list of what comes in and goes out each month), ask yourself this question:
Can I increase my income, or reduce my expenses enough that I can free up cash to repay my debts?
If you can, great! Make a plan to pay off your debts on your own.
If not, your next step is to make a list of your assets, and your debts, to help you decide whether or not you should file bankruptcy.