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7 Facts you Didn't Know About Bankruptcy
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By Tammy Barton

If you’re reading this page, chances are you’re experiencing extreme financial stress. You may feel overwhelmed by debt or so far behind in your bills that you can’t see any other option than going bankrupt. You very likely have debt collectors chasing you and strained personal relationships. Your work and health may be suffering. At a time when you need support and help more than ever, you may feel alone and isolated.

Before we get into explaining how bankruptcy works, please be assured that there’s no financial problem that can’t be fixed; no financial stress that can’t be relieved. Please keep in mind, however, that there are no one-size-fits-all solutions when it comes to money, which is why this information is provided for general purposes only. If you would like to speak with a Personal Budgeting Specialist about a tailored money solution, please contact us to arrange a free, no obligation discussion.

What is bankruptcy?

Bankruptcy is a legal process where you are declared unable to repay your debts. It can release you from most debts in the event that you cannot afford tore pay your creditors. Creditors are the people or companies that you owe money. When you enter into bankruptcy voluntarily, it is called a debtor’s petition. The debtor (you) is the person who owes other people money. Alternatively, your creditors can apply to the court to force you into bankruptcy, in which case the process is called a creditor’s petition.

Seven facts you need to know about bankruptcy

Fact 1: In exchange for giving up certain assets, you receive the protection of the Bankruptcy Act which prohibits creditors taking further action.

Fact 2: During bankruptcy, your creditors (for debts included in the bankruptcy) must stop chasing you.

Fact 3: Most unsecured debts may be included in bankruptcy, but some are not.

Fact 4: The bankruptcy period is usually three years and one day, but it appears on your credit file for five years.

Fact 5: At the end of the bankruptcy period, you are released from your included debts.

Fact 6: Bankruptcy is an opportunity to reduce financial stress and start afresh, but it does come with consequences that vary from person to person depending on their individual situation.

Fact 7: Bankruptcy is not a magic bullet. The key to your financial recovery is getting financially fit and saying goodbye to your money worries forever.

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