There are three leading reasons for personal bankruptcy in Canada. Job loss is one of the prime causes. A quick solution would be to reduce your expenses. However, this might not be possible as you might have to pay regular rent amount, payment towards your car and pay for a few other unsecured debts as well. Second is if you're going through a divorce. This is another reason for increasing expenses. Before the separation, you paid the rent together and had only one electricity and phone bill, but now you have to pay for all of your expenses. The last cause in most cases are due to medical problems. Fortunately, for Canadians their hospital care expenses are covered by the government.
What is bankruptcy in Canada? It is a legal process carried out on your behalf through a bankruptcy trustee. This system is designed to lighten the debt burden of unfortunate and honest debtors. What are the reasons for going bankrupt? This is not an easy step to take so why do people opt for bankruptcy.
Bankruptcy services in Canada includes the role of a trustee. A trustee is licensed by the office of Superintendent of Bankruptcy (OSB) to administer the bankruptcy process. They ensure the rights of either the debtor and creditors are not abused. Trustees prepare official documentation that is filed with the OSB and is used to notify creditors. They will administer the bankrupt estate from beginning to end.
There are certain drawbacks to going bankrupt. You are required to surrender your assets to a trustee once you are legally bankrupt. Your assets will then be sold and the money received will be distributed among your creditors. Next the OSB will notify all credit bureaus on your credit report. If you're in a bankruptcy for the first time the mark remains on your report for a period of seven years. The second time around it stays for a period of fourteen years. The benefit is that it protects a debtor from collection actions, legal actions and also wage garnishments. All your unsecured debts are eliminated.
This entire process is not as simple as it may seem. There are many overhead costs involved. This includes administrative costs like mailing costs, court fees and other government set fees for filing. Nevertheless, once you get discharged of all your debt burden you are ready to make a fresh financial start.