Costs Associated with Declaring Bankruptcy

Sept. 24, 2012 - PRLog -- The cost of declaring bankruptcy depends on your family size, the amount of your existing debts, and how much you earn. Except for certain exemptions, you will lose all of your assets, along with a portion of your monthly earnings. Exemptions include your tools of trade, furniture, retirement savings, farm land, food, and more. All territories and provinces set limits on the types of assets that can be kept after declaring bankruptcy and in what amounts. Whether you will be allowed to keep your house depends on your territory or province.  Generally, exempt property covers all assets that are protected under existing federal and provincial laws. While information is available online, it is updated frequently, and it is best to discuss your situation with a trustee.

While financial institutions should discontinue legal proceedings against you, your creditors can take possession of any assets held as collateral. The trustee can sell all non-exempt assets bought or acquired before debts have been discharged as well as non-exempt assets owned by him. There are other costs associated with bankruptcy, including government fees, court fees, and other administrative costs. In some cases, debtors pay as low as $1,800 in counseling and filing fees, taxes, and disbursements, but the amount to be paid depends on the borrower’s financial situation.

If declaring bankruptcy does not seem to work in your favor, there are alternatives to explore. These include filing a consumer proposal, applying for a consolidation loan, contacting your financial institution, and credit counseling. Credit counseling, for example, involves negotiating a repayment schedule and terms that will benefit the borrower and his creditors. Those who file a consumer proposal accept an arrangement whereby they agree to pay a portion of their existing debts. Debtors can choose from two types of arrangement – consumer proposal and other proposal.

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