Filing for Bankruptcy: Here’s What You Need to Consider

August 24th, 2022
Filing for Bankruptcy: Here’s What You Need to Consider

As you come to grips with your finances, one option you may consider is declaring bankruptcy. It can seem a little nerve wracking but it’s often a very effective solution to get you back on track and earn your financial freedom again.  We will walk through all the pros and cons of this decision so that you can make an informed choice.

What is Bankruptcy?

Bankruptcy is a great option when you want or need to start over, or you have minimal assets, or your assets are exempt from seizure. Remember, for many businesses, this is another tool that you have.  Bankruptcy is a legal procedure that discharges  a person from their debts. The process involves a liquidation of unprotected assets and those funds are distributed to your creditors, and in return, you get a discharge from your debt, and a fresh start.  Sounds scary but  there are many exemptions on assets that render them protected and they could never be seized and you would actually never lose anything.

Reasons to Consider Filing for Bankruptcy

Arrears on Bills

If you are falling behind on the utility bills, loan payments or credit card bills, filing for bankruptcy may be a way to ensure the lender does not take legal action against you. Remember that a creditor may sue you for the money they are owed and they may try to seize assets or garnishee wages. If this is what you are dealing with, you are much better off seeking a free consultation to determine if a bankruptcy is right for you.

Debts that are too Large

Filing bankruptcy will help you get a fresh start if you are over extended and overwhelmed by your debt.  Many people do not know they are beyond their ability to pay off their debt until it’s too late. It can help you avoid and alleviate the devastating effects of owing too much money to many creditors. It is a legitimate way to help you ease the stress of debt while allowing you to become a responsible consumer again.

Credit Cards

Filing for bankruptcy can also help you get a fresh start and eliminate your credit card debt. Many consumers find themselves with ever-increasing credit card debt and large minimum payments. Many people try to solve their credit card debt on their own but it’s often very difficult to break the cycle of high interest debt. One common misconception is that you aren’t allowed to have a credit card during or after your bankruptcy. There is nothing to prevent you from obtaining a credit card to help you rebuild your credit. Often a secured credit card is a great option to rebuild your credit as long as you’re able to control your use of credit. 

Student Loan Debt

Another type of debt that is plaguing Canadians is Student loan debt. More and more people continue to obtain student loan debt with the hope of obtaining a better job or more money from  employment opportunities.  The difficult part is that interest rates on student loans are high, and the minimum payments make it hard to find a job that generates enough income to pay the loans back. If you’re struggling with this type of debt, bankruptcy may be an option to help you get rid of student loans, however there are stipulations depending on how long you’ve been out of school. always contact a Licensed Insolvency Trustee to determine if your student loans can be discharged. 

What Are the Advantages of Bankruptcy?

One of the most powerful tools under a bankruptcy is also the Stay of Proceedings, just like a proposal where all collection activity against you or your corporation must stop. No more collection calls, no more letters from lawyers, no one seizing your assets, garnisheeing wages or no more court proceedings. Bankruptcy also allows you to get your finances under control and get your fresh start.  Filing for bankruptcy allows you to move forward with your life as it allows you to get rid of debt and focus on the future.

What Are the Disadvantages of Bankruptcy?

During the bankruptcy, the Trustee walks in your shoes so to speak, and you have a duty to disclose and surrender any property that you receive until you get your discharge or complete the process.   For example, if you’re going through bankruptcy and you receive an inheritance or a lottery winning or a windfall, you would have to surrender that property to your creditors. They are considered after acquired property and form part of your bankruptcy estate.

There is an income monitoring component as part of the process throughout the term of your bankruptcy and your bankruptcy may be extended if you earn too much money. 

There is usually a monthly payment to pay for the fees regarding the administration of the bankruptcy. However, we always offer payment plans to make sure the bankruptcy process is available to everyone. 


The government feels it would unreasonable and unfair for someone to be held responsible for their debts and to never have any options to get out from under them.  This is why the Bankruptcy and Insolvency Act exists and why bankruptcy is an option, as the government  wants to ensure an honest and unfortunate debtor is able to get back on their feet.

 Paul J. Pickering and Associates Limited is a Licensed Insolvency Trustee firm in London, Ontario. We can help get your finances in order, so you can lead a debt-free life moving forward with our different services.

If you’re looking for help with debt and your ongoing payments or if you want to review your options and learn about consolidation loans, debt management programs, credit counselling, financial counselling, proposals, consumer proposals and bankruptcies, we at Paul J. Pickering and Associates Limited are here to help you. 

We have over 30 years of experience in helping our clients resolve their financial problems. We specialize in debt management, proposals. consumer proposals, debt counselling and bankruptcy in London, Ontario.  Whether you’re starting to get overwhelmed and you don’t know how to handle your debts and minimum payments, contact our office today for your free initial consultation, and we’ll put together a plan that will work for