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Common Bankruptcy Fears Laid to Rest
Money problems are still an uncomfortable subject for many people. Because people don’t want to talk openly about their debt problems there is a lot of misinformation floating around about the debt solution options available. There are five common fears about bankruptcy
Fear #1: I’ll never get credit again
Quite simply, you will. Immediately after your bankruptcy getting credit will be difficult, but possible. You will have to start small, and demonstrate reformed behaviour by paying your payments on time in full. A secured credit card is a good option. 2 years after your bankruptcy, as long as you have demonstrated good borrowing behaviour, it will be reasonably easy for you to get credit.
Remember that the rates at which you get credit are affected by how much debt you already have, so clearing all your pre-bankruptcy debt can even help you get better borrowing rates in the long term.
Fear #2: Bankruptcy will ruin my credit
If you aren’t paying your bills your credit is already in bad shape. Unpaid debt ranks the same as a bankruptcy on your credit score. Bankruptcy will put a black mark on your credit record, but as mentioned above you can get out of it eventually, and after seven years it won’t show up on your credit report at all. You are also a much more attractive lender if you don’t have any other debt.
Fear #3: I’ll lose all my possessions in bankruptcy
You won’t. Every province has a list of exemptions (property you get to keep). The value of that property changes from province to province so check with your Bankruptcy Trustee.
Even if you have an asset that is technically worth more than the exempt value, your Trustee is only interested in the equity (the money you could get if you sold the asset). If your house is worth $350, 000 and your mortgage is $345,000 it isn’t worth it to sell the asset, so you would keep it.
Fear # 4: I’ll have to explain how this happened to a judge
Most people never go before a judge, because judges are only involved when there is a dispute. As long as you fulfilled all of your duties as a bankrupt then you will be discharged automatically.
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