What is the Cost of a Red Deer Bankruptcy?
When searching the Internet for information about getting out of debt, it is hard to find a website that does not include the advice that personal bankruptcy should be the last resort. These sites rarely point out the cost of a Red Deer bankruptcy is far less than any other debt solution, focusing instead on the negatives of the non-monetary costs, such as the impact a Red Deer bankruptcy can have on your credit rating.
A monetary cost that often misleads residents when considering bankruptcy is what they might lose in assets. It is true that higher income filers can expect to contribute some of what they own to go towards creditor repayment if they file a Red Deer bankruptcy.
But how can you determine the real cost and compare it with alternative solutions to bankruptcy? The truth is the only way to do that is to meet with a bankruptcy trustee licensed in Alberta.
As you may know, the Bankruptcy and Insolvency Act of Canada (BIA) ensures no Canadian loses all they own when declaring bankruptcy. However, in an effort to be fair to creditors, higher income filers who can afford to do so will have to contribute some of what they own and some of what they earn.
Each Province has exemption allowances for your personal assets. In Alberta, the exemption allowance for home equity is $40,000 in a principal residence. This means if you have $60,000 in equity in your home, you may have to surrender it in bankruptcy.
This leads some residents in financial trouble to seek non-bankruptcy alternatives to save their home, without comparing the costs of an alternative solution to bankruptcy. As an example, if you owe $200,000 in unsecured debt, a consumer proposal negotiated with your creditors might reduce that total to $100,000 and you could keep your home.
Some debtors will do this without ever asking themselves the question of whether it is worth it to them to agree to pay back $100,000 in debt to preserve $60,000 in home equity.
The true cost of a Red Deer bankruptcy depends on your unique financial circumstances. The only way you can get an accurate idea of what bankruptcy will actually cost and how that compares to non-bankruptcy debt solutions is to meet with a bankruptcy trustee licensed in Alberta.
Initial consultations are free of charge and we can review your financial situation and help you determine the debt solution alternatives available to you and the cost of each.
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