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 (your assets), and what you owe. In this article we will discuss what you owe (your liabilities).
An liability is something you owe. Get a piece of paper and make a list every debt you have.
Debts will include:
- credit cards;
- bank loans;
- pay day loans;
- finance company loans;
- child support arrears;
- family debts.
Be sure to include everything.
Next, beside each item on the list, write down the amount you owe, and the interest rate you are paying. This will give you a complete picture of your debts. Now it’s time to ask yourself an important question:
I know from my budget how much money I have to spend to pay my debts each month. I know what assets I own that I could sell to pay off my debts. I know what I owe, and what the interest rate is on my debts.
Can I afford to repay all of these debts on my own, in a reasonable period of time (say the next one to three years, not including my mortgage)?
If the answer is no, you may be insolvent, so it’s time to look at more strategies to avoid bankruptcy.