When declaring personal bankruptcy in Toronto, an individual makes the choice to surrender all of his assets and possessions to a Licensed Insolvency Trustee in order to obtain relief from overwhelming debts and protection from creditors. It is a legal option for debt relief provided by federal law under the Bankruptcy & Insolvency Act.
Bankruptcy is usually taken as a very last resort by people who are no longer able to pay off their debts as it can have a considerable effect on their future credit, social status, and their self-image. Nonetheless, it offers several advantages to you as well as to your creditors. It can really assist you in obtaining relief from your debts and at the same time offer your creditors an equal and fair solution for recovering the money that you owe them.
Let’s take a look at the many ways you can benefit from declaring personal bankruptcy in Toronto:
No more harassing collection calls
One of the worst things to cope with when dealing with mounting financial pressures is the stress of dealing with bill collectors. Each day you wake up wondering if you’ll get one of those nasty phone calls from collection agencies and creditors demanding their money. The anticipation every time the phone rings can be incredibly mentally and emotionally taxing. Once you file for bankruptcy, your Licensed Insolvency Trustee will notify your creditors of your bankruptcy within days and once they receive the notice from the trustee, your creditors and collection agencies are no longer allowed by the law to contact you. Your trustee will take over at this point and take charge of communicating with your creditors directly.
Stop wage garnishments
When you stop making payments on your debts, your creditors can go to court and obtain a wage garnishment against you. This court order legally forces your employer to send a portion up to 50% of your salary directly to your creditors as payment of your debts. When you file for bankruptcy, your trustee will notify your employer, creditors, and the court of your status and garnishment of your wages should immediately stop, except for wage garnishment for child support orders enforced by the Family Responsibility Office.
Stops all legal actions
Once you file for personal bankruptcy, a Stay of Proceedings takes effect which automatically puts a stop to legal actions filed against you for non-payment of debts. This means that lawsuits are suspended, foreclosures are halted, repossessing of property is stopped and garnishments being processed are put on hold. Whatever stage the lawsuit is at in the court of law, the Stay of Proceeds draws all legal proceedings to a close and creditors can no longer make any attempt to undertake any type of collection activity towards you.
Eliminate debt
Once you have completed your bankruptcy and are discharged, which happens usually within a 9 to 21 month period, then all debts that were included in your bankruptcy are eliminated permanently. Most, if not all, unsecured debts may be eliminated, including debts on your credit cards, lines of credit, bank loans, payday loans, income taxes, overdrafts, and student loans if you’ve been out of school for more than seven years. It’s important to consider that some debts will remain, in particular secured debts such as your mortgage, car loan, alimony, child support, court fines or penalties and student loans that are less than seven years old.
Filing for personal bankruptcy in Toronto is a difficult decision. You may find it challenging to rebuild your credit, secure loans, and adjust to a scaled-down lifestyle. However, if it is an option that is best for your situation, it can give you tremendous relief from the burden of massive debt and provide you with a fresh financial start.
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