What is Personal Bankruptcy?

What is bankruptcy?

Bankruptcy is a legal way to be free of most of your debts. Personal Bankruptcy is designed to allow an honest person who has fallen on unfortunate circumstances the chance to start over, subject to reasonable conditions.

Some Qualifying Questions

• Do you use credit cards as a necessity rather than a convenience?
• Are payments on current debts only enough to cover interest and carrying charges rather than lowering the principal?
• Have your utilities been shut off due to lack of payment?
• Have your wages been garnished?
• Do you frequently obtain cash advances to make it to your next payday?
• Do you avoid answering the phone because you have creditors calling?

Possible Solutions

• Increase Income and/or Decrease Expenses

• Contact your creditors. Call your creditor and explain why you have been unable to pay your bill. Most creditors will be willing to revise your terms to make your payments more manageable.

• Credit Counseling. Counseling services may help you devise a budget and stick to it. Contact your local family or community counseling office for more information on such services.

• Debt consolidation loans. Your financial institution may be able to offer you a consolidation loan, which covers all your debts and gives you one payment per month. Interest rates will vary so make sure to do some research.

• Consolidation Order. (Orderly Payment of Debts or "OPD") If you live in Alberta, you may be able to apply for a Consolidation Order. Part of the Bankruptcy and Insolvency Act, a Consolidation order sets the amounts and times of payments to the court, who in turn make payments to your creditors. Unlike personal bankruptcy, you must pay all the creditors all of the money that is owed to them.

• Consumer Proposal. A proposal is made to creditors that will reduce your debt, change payment schedules, and is usually some combination of both.

• Bankruptcy. If none of the above solutions work for you may choose bankruptcy. Bankruptcy is a legal way to be free of most of your debts. Personal Bankruptcy is designed to allow an honest person who has fallen on unfortunate circumstances the chance to start over, subject to completing specific duties, and making payments as required by the Bankruptcy and Insolvency Act.