The vast majority of people who declare bankruptcy are honest creditors who have found themselves owing more money than they can afford to repay, usually through little to no fault of their own. There are dozens of causes of insolvency, including loss of income, taking on extra debt to care for a family member, bad investments, personal injury, and more. You’re considered insolvent when you don’t have enough money to pay back your debts. Bankruptcy is one way to get through insolvency.
Licensed Insolvency Trustees are professionals who help individuals and businesses who are insolvent and need to declare bankruptcy in Ontario. A Licensed Insolvency Trustee should be the first person you call when you are looking for information about personal bankruptcy, but these answers to frequently asked questions about bankruptcy can give you an idea about the process.
Who Declares Bankruptcy?
Around 60 percent of individuals who declare bankruptcy earn $30,000 or less. Many are individuals who have lost their jobs or taken a pay cut. Sudden loss of income is one of the most common causes of insolvency. A good reason to go debt-free is making yourself more financially resilient; without debt, you can weather longer periods of unemployment. You may be able to pay your debts now, but try budgeting without your spouse’s salary or your own contributing to your household income. Nearly 10 percent of people who went through the insolvency process had an annual income of $60,000 or higher. Half had at least post-secondary education, two-thirds were married (the divide between single and divorced was evenly split), and the median age of bankruptcy-filers increased to 45 as more seniors have been filing in recent years.
Bankruptcy happens to all types of people in different income brackets, different family situations, and at different ages. Licensed Insolvency Trustees are not there to judge or blame. According to Licensed Insolvency Trustees David Sklar & Associates, the most important job of an LIT is to bring you debt relief and offer credit counselling that helps you stay debt-free.
Is Declaring Bankruptcy Free?
No – Licensed Insolvency Trustees do have a fee. It’s a thought that can sting, but while Licensed Insolvency Trustees are tightly regulated by the government, they are not a government service. However, the amount you pay a Licensed Insolvency Trustee usually depends on your assets and income. A consumer proposal can also save you from paying thousands in debts.
Will Bankruptcy in Ontario Clear All of Your Debts?
Only your unsecured debts will be settled by declaring bankruptcy. These include credit card debts, payday loans, lines of credit, and any loan without collateral. Unless you have been out of school for longer than seven years, student debt will also not be erased by declaring bankruptcy. You will still have to pay your mortgage or make car payments, as well as alimony and child support. For many debtors, a consumer proposal makes more sense than bankruptcy in Ontario. Consumer proposals in Ontario don’t involve selling assets to pay unsecured debts.
More and more insolvency filings are consumer proposals in Ontario and Licensed Insolvency Trustees like David Sklar & Associates often encourage them. However, only a Licensed Insolvency Trustee can assess your finances and advise you on the best way forward. Seek them out for a free consultation if you’re deep in debt.
