Thousands of Canadians declare bankruptcy every year. Bankruptcy is designed to relieve a debtor of its financial obligations when it can not repay the debts owed to its creditor. There are various strict laws and regulations regarding bankruptcy. Bankruptcy is a regulated legal status that an individual or organization can occupy. In Canada, bankruptcy is governed by the Bankruptcy and Insolvency Act and is applicable to businesses and individuals as well.
How often can you file bankruptcy?
Individuals declare bankruptcy because of their inability to repay their creditors. This is the last resort for those who are under pressure from creditors who demand that their debt be paid. It is also a way to end the harassment of collection agencies or aggressive creditors when a debtor can no longer afford to repay its debts. Declaring bankruptcy also serves to start over financially. click here to go on bankruptcy-basics.org and learn what you should know before you file bankruptcy.
Who declares bankruptcy?
Usually, individuals and businesses go bankrupt because of a series of unfortunate events. To illustrate, an individual who owes a lot of money and who falls ill or loses his ability to work may lose his ability to repay his debts. This can eventually result in bankruptcy. Businesses can go bankrupt if they do not get enough income to cover their expenses.
How does bankruptcy work?
You must go through the services of an administrator to declare bankruptcy. You can find them online or search in your local directory. You must review your situation with a director before declaring bankruptcy. In most cases, only your creditors and you will know that you have declared bankruptcy.
During your bankruptcy, you and your administrator will work together to determine the responsibilities. The period of time you will remain with the bankrupt status depends on your situation, but the minimum space of time and 9 months. Your administrator will investigate your situation, administer the fair distribution of your property and assets among the creditors and recommend whether or not the debtor should be released.
Credit Rating & Disadvantages of Bankruptcy
For an individual who faces so much financial distress, where bankruptcy is the only way out, there are very few disadvantages in a bankruptcy declaration. In fact, when an individual is at this point, his credit rating is already badly damaged, and the declaration of bankruptcy will do him more harm. Moreover, after bankruptcy, the individual will no longer have debts.
Rebuilding Your Credit After Bankruptcy
Bankruptcy remains on your file for 7 years; however, you can rebuild your credit in a much slimmer (2 years) time by following the guidelines in our Credit Learning section.