The decision to file for bankruptcy is a major decision that will negatively affect your credit rating. Consider consulting a professional credit counselor to help you weigh the pros and cons before taking such a big step. If you are unable to pay your bills and manage your debt with settlement offers and negotiation, bankruptcy may be your only option.
What is Bankruptcy?
Bankruptcy is a legal process performed under the Bankruptcy and Insolvency Act to help a person cope with a financial crisis.
Because of your inability to pay your debts, you assign all of your assets, except those exempt by law, to a licensed trustee in bankruptcy. This process relieves you of most debts, and legal proceedings against you by creditors should stop.
A decision to file for bankruptcy is a serious step, and in many cases, it doesn't wipe your credit slate clean or give you a fresh start. It also stays on your credit report for six or seven years from the date of discharge, depending where you live. Its presence there could affect your ability to buy or rent a home, or even to obtain car insurance.
An individual who cannot meet his or her financial obligations or is an insolvent debtor qualifies to file for bankruptcy.