Bankruptcy should only be considered as a last resort if you can no longer meet your financial obligations. It’s a serious decision with serious consequences. When someone declares bankruptcy, all their assets, except those the law allows them to keep, are turned over to a trustee. The trustee sells the assets and uses the proceeds to pay off creditors.
Repercussions of bankruptcy
- Some debts are immediately cancelled out, such as credit card debt.
- Other debts are not affected, such as alimony and child support, taxes, etc.
- As a result, borrowing could cost you more.
- The bankruptcy may remain on your credit report for several years.
Bankruptcy warning signs
How to tell if you are headed for bankruptcy
- You don’t have a budget.
- You have no control over your spending.
- You have no financial cushion (emergency fund).
- You’ve purchased a home above your means.
- You’ve purchased a car above your means.
- You use credit cards indiscriminately.
If you recognize yourself in these warning signs, it’s time to start turning things around.
Did you know?
Your Caisse populaire makes available to you a section on personal finance called Manage your daily finances.