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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.

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