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I am having money problems. Should I file for bankruptcy?
Bankruptcy is a legal process that allows you to get rid of your debts if you cannot pay them off. Bankruptcy can give you a fresh start. But it will affect your ability to get credit cards, mortgages, or other loans in the future.
You can only file for bankruptcy if you are insolvent. Insolvent means that:
- you don’t have enough money to pay your debts, and
- you have more than $1,000 in unsecured debt.
An unsecured debt is money that you owe that doesn’t have collateral. For example:
- credit cards
- payday loans
- cell phone bills
- lines of credit
Before you file for bankruptcy
Most people can fix their debt problems without filing for bankruptcy. Instead of bankruptcy, you can:
- try to work out a repayment plan with your creditors. You can talk to your creditors on your own, or with the help of a non-profit credit counsellor. This kind of repayment plan is called an informal restructuring.
- talk to a financial advisor at your bank. An advisor can help you make a plan to pay off your debts. They can also help you apply for a consolidation loan.
- talk to a Licensed Insolvency Trustee about your financial situation and what you can do. And a trustee can help you file a consumer proposal, which is another option.