Declaring bankruptcy, once regarded as a shameful practice, is now a more viable option for the financially overwhelmed. But going broke can have significant repercussions.
By Gordon Powers
May 16, 2009
Although it has lost much of its stigma, declaring personal bankruptcy is still considered a last resort for many people sinking under the weight of unmanageable debt. Nonetheless, roughly 116,000 Canadians did just that in 2008, reports the Toronto-Dominion Bank.
And that number will continue to climb over the next two years, perhaps as high as 160,000, as rising unemployment takes its toll on heavily indebted households, TD estimates.
But bankruptcy is not an easy - or pleasant - fix for financial problems. It comes with substantial side effects and shouldn't be taken lightly.
How do you know when it's time to finally pull the plug? Well, if you're always behind in your payments and juggling cash advances or payday loans, you're likely a good candidate. And if your marriage is crumbling over money, then bankruptcy may help clear the deck as you split.
It's all a question of solvency. Generally speaking, you're insolvent if the money you owe outweighs your assets and you have no reasonable chance of getting out from under. But that doesn't mean you have to declare bankruptcy from the outset.
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It's funny that a lot of Canadians don't think the recession has hit Canada yet. Granted, it's not nearly as bad as it's going to get, but I don't think 95% of Canadians see the writing on the wall. And yes, bankruptcies will continue to rise.
ReplyDeletethats only because of the media stating Canada is immune, they have the best banks, real Estate will not crash, its different here, the usual lies that the media states..next thing they say is oops.... It was unexpected, its because of the US, unpredicted..blah blah
ReplyDeleteI would like to see a chart of personal bankruptcies in the US? Anyone have a link?
ReplyDelete