If you have a lot of debt and you are thinking about bankruptcy as a solution, there are four factors you should consider.
- Bankruptcy will eliminate most of your debts, but not all debts. Bankruptcy discharges your unsecured debts, such as credit cards, payday loans, bank loans, and even income taxes. Bankruptcy does not discharge secured debts (such as your car loan if you are keeping your car), and it does not eliminate child support or spousal support debts. You should review the type of debts you have to determine if bankruptcy is the solution for you.
- Bankruptcy is not free. You will be required to make a monthly payment that is based on your family income. The more you earn, the more you are required to pay. Before filing bankruptcy you should understand the surplus income calculation to estimate the cost of bankruptcy in your situation.
- Bankruptcy does not reduce your normal monthly living expenses. If your debts were caused by excessive spending, you must take steps to reduce your expenses, or increase your income, to prevent the accumulation of more debt in the future.
- Bankruptcy is not the only option for eliminating debts. In many cases there are better options, such as a consumer proposal. You should review all options to determine the correct option for your unique situation.
The final decision is up to you. There are costs to filing bankruptcy, but there is one significant benefit: bankruptcy will eliminate most of your debts. If you can’t repay your debts on your own and you need a fresh start, bankruptcy may be the option for you. Contact a local bankruptcy trustee today.