We learn a lot about the different aspects of our lives over the years. Whether it’s about business, relationships, history, or even finances. When it comes to finances, we were never taught thoroughly about bankruptcy back in school. Some people might reach a certain point in their lives where they can’t manage their finances properly, get into debt, and then have to file for bankruptcy. But not a lot of people know that bankruptcy can have positive and negative impacts on their lives. Read on if you want to learn more about bankruptcy.
You Must Prepare Your Documents
You should always prepare your documents when you decide to file for bankruptcy. Insolvency requires several important documents and you need to be sure that every document is correctly filed. You should always make a checklist of any important documents, especially if it’s for bankruptcy. You can research what you need for the full paperwork plan to make the process go smoothly.
You will need the paperwork that covers your tax returns, mortgage statements, the fair market value of your property, income documents, bank statements, insurance documentation, loan statements, and any other paperwork that includes other expenses. This also includes child support or alimony if you’re divorced. Make sure everything is organized and appropriately filed. You need to have your documents checked by an insolvency specialist or a lawyer to make sure that there aren’t any irregularities that can slow the process down.
Is There a Right Time for It?
Many people ask if there is a right time to file for bankruptcy, but that shouldn’t be a contributing factor to you. Thousands of Canadians and Canadian businesses were hesitant to file for bankruptcy, but they made the right decision after learning the advantages of insolvency. The timing for declaring bankruptcy depends on your situation and debt size, but you need to consider the pros and cons of your insolvency before you make that decision. Instead of focusing on the timing, you should focus on finding out if the advantages outweigh the disadvantages first.
You need to think about your credit score and how low it can get, but if your insolvency can help you improve your credit score over time then it can be worth it. You would be free from the burden of debt and you won’t have to worry about creditors constantly pursuing you for payments. Your bankruptcy might stay on your credit report for six years, but it’s worth it if you live peacefully and debt-free.
Companies Can Still Continue Their Operations
Fortunately for a lot of companies, they can still continue their operations even after they file for bankruptcy. Insolvency has several chapters to suit different people and businesses depending on their situation. You can file for the business-based Chapter 11 that applies to a lot of businesses. You can continue working and operating, but you will need to restructure your company accordingly to pay back what you owe. You won’t have to close your doors or shut down because you will not liquidate your assets to repay your debts.
You need to have a long discussion with your lawyers, insolvency specialists, or trustees to come up with a decent plan that will help you pay what is left of your debt. In some cases, this chapter can get a huge portion of your debt forgiven, keeping you relevant in the business world and you will have good relations with your creditors too. Just make sure that you’ve reorganized your business correctly to carry on without any additional financial issues moving forward.
Not All of Your Assets Will Get Liquidated
Many people need to understand the fact that not all of their assets will get liquidated when they file for bankruptcy. Some people fear insolvency because they believe that the government or the creditors are going to come for every single asset or property they own. That is not the case at all, especially for individuals who barely have enough to pay for their bills.
Some liquidation chapters in bankruptcy like chapter 7 allow people to keep their personal assets even if they still need to pay more. You can rest assured that you can keep your house, car, retirement accounts, and personal assets that you don’t agree to liquidate. You can come up with other assets that you can live without and sell them off to pay portions of your debt. People need to understand insolvency is a lifeline and it will not destroy your basic needs to live normally.
It Will Be Stressful
Even though filing for bankruptcy can be beneficial, it will still be stressful and difficult. You should be prepared that there will be times where you get emotionally drained and overthinking too much can be overwhelming. This is why you shouldn’t hide or shut yourself out from your loved ones. You need to be close to your family and friends because you will need their support, counsel/advice, and reassurance. The insolvency phase is not easy to bear alone.
You should always have a support group that can keep you calm and hears you out whenever you need it. Being mentally, emotionally, and physically drained can lead to a lot of mistakes, especially with your paperwork preparation. If you want the process to go smoothly, then you need to ignore the feelings of shame and accept the fact that you are human, and you made some mistakes. Your loved ones will always be on your side and you should never refuse to get their support.
You should realize that filing for bankruptcy isn’t an easy decision. You need to be sure that you’ve done every step possible to manage your finances and debt before going down this road. Undoubtedly, bankruptcy is an excellent option for a lot of people that have unending debt. Managing your debt and financing your daily needs can become unbearable sometimes. If you want to live a hassle-free life without any financial stress, then you need a lifeline that can free you from the burden of debt. Insolvency can be the most convenient option for you if it’s the only way to avoid total financial ruin.
