13 Myths about Personal Bankruptcy in Quebec: All the Truth
Finally, unravel the truth of the false about personal bankruptcy and indebtedness. Demystify myths and rebuild your credit on a solid foundation. Be insightful and distinguish false ideas and lies from reality. Make an informed choice with full knowledge of the facts.
Some myths are unfortunately tough. Personal bankruptcy being a taboo subject, several misconceptions are still circulating on the subject.
In order to unravel all of this, Mortgage Loan Submissions writes you about the 13 most tenacious myths in 2018.
myths of personal bankruptcy
Myth # 1: It’s the irresponsible people and the lazy ones make a personal bankruptcy
In reality, there is no typical victim of bankruptcy. Separation, divorce, job loss, illness … can expose you to bankruptcy, regardless of your social status or age.
You just need to have $ 1,000 of debt and an unforeseen event, forcing you to stop working, causes financial difficulties such that you can not repay them so that you eventually have to declare bankruptcy.
Myth # 2: By filing a personal bankruptcy, you will lose all your property
Do not be afraid, by filing a personal bankruptcy, you will not become homeless. When you declare bankruptcy, your trustee in bankruptcy helps you to list your seizable property . The proceeds from the sale of these will be used to compensate your creditors.
It is likely that an automobile of little value or rented can be preserved.
As for your home, a variety of factors, including the balance of your loan, will be taken into consideration.
confidential personal bankruptcy
Myth # 3: Everyone (friends, family, colleagues) will know about your personal bankruptcy
In reality, not all personal bankruptcies are published in newspapers; only the most important ones give rise to legal advice.
Your acquaintances will have to take steps to find out if you have gone bankrupt. Why would they do it if you do not talk about anything? For example, if all your exchanges with your trustee in bankruptcy are by email (no letter, no phone), everything will remain confidential.
Myth no. 4: Personal bankruptcy destroys your credit rating
Although a personal bankruptcy taints your credit report in a serious way, is it really better to have frequent visits by bailiffs or make your payments with several weeks late, or even months?
In reality, about six (6) years after being released from your debts, a first bankruptcy is erased from your credit report.
Myth # 5: After a personal bankruptcy, you have no debt
Personal bankruptcy frees you from all your erasable debts only
Without the advice of an authorized insolvency trustee (SAI), myths about indebtedness and personal bankruptcy expose you to misinformation . You can misjudge your situation and the inherent solutions.
Do not hesitate to contact a professional who will answer all your questions clearly. Have all the tools you need to make an informed decision on the best way to free yourself from debt.
Trustees in bankruptcy, financial advisors and Mortgage Brokers, partners of Mortgage Loan Submissions, our online digital bid solicitation platform, will let you know all the solutions that can help you eliminate your debts and start from scratch.
Myth # 6: Doing Business with a Trustee in Bankruptcy is Expensive
Bankruptcy and Insolvency Act 178 sets the fees associated with the service of a trustee in bankruptcy. In addition, the first meeting is free of charge and without obligation.
The cost of your bankruptcy will be determined according to various elements of your own financial situation such as: your income, your seizable assets, the number of your dependents, your taxes, childcare expenses, alimony … to pay, the expenses related to your health and incurred by your job, etc.
Myth # 7: Going Bankrupt is Free
Although the first consultation is free of charge, the costs associated with the service of a trustee in bankruptcy amount to approximately $ 1,500. You can include this amount in the total bankruptcy and repay it by monthly payments.
Also, during the entire process leading up to the release of your personal bankruptcy, all your income that will exceed a certain threshold calculated from your first meeting with your professional must be given to your creditors.
Myth # 8: After a personal bankruptcy, you never have access to credit again
As mentioned above, your credit record remains compromised for six years (1 st bankruptcy), after which all trace is erased. You will then have access to credit again.
In addition, be aware that during these six (6) years, you can rebuild your credit report and acquire, under certain conditions (if you have a fixed and sufficient income, for example), a credit card guarantee (with advance deposit), a car loan, and sometimes even a mortgage. Ask your Mortgage Broker partner Mortgage Loan Submissions.
Myth # 9: My spouse’s credit rating will also be compromised
A personal bankruptcy is, by definition … personal. The credit rating of no one else will be compromised.
That said, if you have taken out a loan jointly with a third person (as a couple, with a family member, a friend …) your co-signer will have to take responsibility for this loan.
If you plan to declare a personal bankruptcy, you should notify that person so that he or she can attend your meeting with your financial recovery professional and be able to deal with this new situation.
Myth # 10: It’s better to have a trustee in bankruptcy than a very last resort
Consulting a trustee in bankruptcy is no more damaging to your credit rating than meeting with a financial advisor, mortgage broker or other financial adjustment professional.
What’s more, if you are over-indebted, it is quite plausible that your credit rating is already compromised. A trustee in bankruptcy will assist you and guide you with sound advice to help you get back on track.
Myth # 11: To go bankrupt is nothing!
Do not underestimate the scope of a bankruptcy. Try to talk to your bankruptcy trustee, financial advisor or mortgage broker if other options can not be considered.
During the 9 months (21 months if your monthly net income is more than $ 2,121) that the process leading to the release of your debts lasts, you must:
- Leave your trustee in bankruptcy complete control of your finances
- To get rid of your traditional credit cards
- Justify each of your expenses
- Make known all your money entries
- Even if a personal bankruptcy leads to a reset of your credit report, it’s not a pleasure.
go bankrupt, a more common solution than one might think
Myth # 12: Bankruptcy happens to few people; it’s embarassing
Bankruptcy is more common than we think. Many Canadian consumers file a personal bankruptcy report each year (120,000 in 2015).
In addition, 10% of Canadians used the services of a trustee in bankruptcy during their lifetime.
If bankruptcy is your only solution, stay positive. You are not alone in dealing with this situation. The Bankruptcy and Insolvency Act 178 was designed to give those who, like you, are in financial trouble, a chance to get back on a solid footing.
Myth # 13: By meeting a trustee, you will systematically go bankrupt
A trustee in bankruptcy is a professional in financial recovery. Just like a financial advisor or a mortgage broker, at your first meeting, he will evaluate your financial situation free of charge and propose solutions that suit your situation. It may be a personal bankruptcy, but if a consumer proposal, a proposal concordat, the voluntary deposit … you were also suitable.
It will let you know the pros and cons of each of these options in order to guide you towards a lasting outcome to your need for financial recovery.