Thinking about filing for bankruptcy. (British Columbia)

BaslbcBaslbc Registered User
edited April 2011 in Help / Advice Forum
Hello everyone.

After discussion about a number of topics with a friend, he recommended offhand that I consider filing for bankruptcy, and after looking into some details about what actually occurs, I have a couple of questions that I could not find an answer to. My estimated debt is approximately $25,000 CAD.

From what I understand, filing for bankruptcy erases most debts (but not all) and prevents creditors from contacting you about said debts. It was stated that debts that were larger than a certain amount would be reported in the financial section of the local newspaper, but it did not state what the threshold is.

If I'm working while filing for bankruptcy, how does that affect the proceedings and my pay?

I know that the threshold for what can be kept after you file for bankruptcy approximately $31,000, is this also the minimum? Is my level of debt not severe enough to file for bankruptcy?

How does bankruptcy affect applying for student loans? I've heard that poor credit does not prevent access to student loans.

Thanks for reading, I appreciate any help on this matter.

Baslbc on

Posts

  • DeusfauxDeusfaux Registered User regular
    edited March 2011
    knowing as little as I do about the whole thing, I know enough to tell you, you are nowhere near enough debt to rationally be considering it as an option.

    Deusfaux on
  • ComahawkComahawk Registered User regular
    edited March 2011
    My first question is why are you considering filing for Bankruptcy? I have never heard of someone doing that because of $25000 in debt.

    Comahawk on
  • ZeonZeon Registered User
    edited March 2011
    What kind of debts are they? I know for sure in canada, student loans no longer disappear when filing for bankruptcy like they used to (the law was changed about... 10 years ago? maybe 15 now). Instead, theyll just garnish your wages. Im pretty sure that goes for a lot of your other debts as well, to prevent exactly what youre trying to do, which is frivolously file for bankruptcy over a relatively minor amount of money.

    Even if you work minimum wage in BC, 25,000 dollars is still less than 2 years takehome pay. You could easily pay that off within 10 years. You could also take a second job and pay it off a lot sooner. Or, you could find a better paying job (off the top of my head, construction) and pay it off faster as well.

    If you file for bankruptcy now over 25,000 dollars, more than likely in 10 years you will feel like a real idiot when you still cant get a bank loan, or an unsecured credit card, or possibly even a job because your credit is horrible. If you had 100,000 dollars of debt, somehow, then bankruptcy becomes a more attractive option. Not to mention the fact youll probably have your wages garnished anyway to pay off some portion. Wont that suck?

    Zeon on
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  • RikushixRikushix Registered User regular
    edited March 2011
    As Zeon said, minimum wage just got raised to $10.25. I don't know what your debts are (do you mind telling us?) but even after tax, less than two years of solid work would pay all of that off. Even considering food and a place to live you could have that completely gone in five years. It sounds rough but that's a hell of a lot better than some debts people find themselves in. Bankruptcy will put you out of commission for taking out ANY line of credit for, what, five years at least? Off the top of my head. Maybe even seven.

    Also, I'm pretty sure I read somewhere that student loans aren't magically erased when you file for chapter 11. Almost positive. So if that's your scenario...

    Rikushix on
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  • Al_watAl_wat Registered User regular
    edited March 2011
    I might be totally wrong here, but can't you get your wage garnished when you file for bankruptcy? Or is that more of a case where someone who has a debt against you takes you to court?

    Al_wat on
  • khainkhain Registered User regular
    edited March 2011
    Al_wat wrote: »
    I might be totally wrong here, but can't you get your wage garnished when you file for bankruptcy? Or is that more of a case where someone who has a debt against you takes you to court?

    It depends on the type of bankruptcy, I assume Canada has something similar, but in the US you can basically file for full liquidation where all debts are eliminated which is known as a Chapter 7 or you can file a Chapter 13 where the debt is reorganized and you have a plan to pay it off in a certain time frame. There are other differences and it's pretty complicated, but the one factor for why everyone doesn't files a Chapter 7 is that if your filing is abusive, basically you could file a Chapter 13 and repay some or all of your debt, your forced into a Chapter 13 anyway.

    Also as someone already pointed out at least in the US a bankruptcy stays on your record for seven to ten years and would make it extremely difficult to get any sort of credit. If you're serious about attempting to do this then you should go talk to a bankruptcy lawyer and find out if what you want is actually reasonable.

    khain on
  • TzyrTzyr Registered User regular
    edited March 2011
    Rikushix wrote: »
    As Zeon said, minimum wage just got raised to $10.25.

    First off, unfortunately, min wage in bc won't be 10.25 till next may:
    The general minimum wage will increase on May 1, 2011 to $8.75 and be $10.25 per hour by May 2012.




    Regarding student loans and Bankruptcy, I've been told that too that student loans are not except but I did find this:

    http://bc.bankruptcycanada.com/faq.htm#17
    What About my Student Loans?

    Loans can be erased in a bankruptcy if the student was in school 7 or more years ago. This amendment will apply where the debtor obtains his or her discharge on or after July 7, 2008 (PROVIDED that at the time they filed they had ceased to be student for the required seven years) or the debtor had or becomes bankrupt on or after July 7, 2008.

    Dunno the validity of the site though.

    Tzyr on
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  • RikushixRikushix Registered User regular
    edited March 2011
    I am not sure what I was thinking, yes, the minimum wage is increasing over time. I knew that :?

    It's getting bumped up in stages, I believe.

    Rikushix on
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  • Nova_CNova_C I have the need The need for speedRegistered User regular
    edited March 2011
    Bankruptcy isn't about erasing debt, but turning something unmanageable into manageable. From what I understand, you don't get to decide what debt to pay off - the courts do and your wages are garnished for payments. If you're having trouble with your current debt load, talk to a financial advisor at your bank. There's the option of consolidation if a bunch of your debt is high interest, like credit cards. They offer free advice and they know what they're talking about.

    Nova_C on
  • JohnnyCacheJohnnyCache Starting Defense Registered User regular
    edited March 2011
    I wouldn't pull that trigger over 25,000

    JohnnyCache on
  • IcemopperIcemopper Registered User regular
    edited March 2011
    Filing for bankruptcy destroys your credit, and for that amount, like others have said, you can pay it off. It might take time, but that kind of money is manageable. Just get dedicated and pay for absolutely nothing but the debt and necessities.

    I almost hate to do this... I didn't like the book as a whole.... but the author does give some good recommendations and ideas as to how to get motivated to tackle debt. So... here goes... try reading "The Total Money Makeover" by Dave Ramsey. He says what needs to be said for some people, and he gives examples of people wayyyyyyyy more in debt than you who are totally fine now without filing for bankruptcy. The book is very poorly written and his ideas are very vague, but it might be worth a week-long read.

    Icemopper on
  • Blake TBlake T Registered User regular
    edited March 2011
    How much do you earn a year?

    Blake T on
  • BaslbcBaslbc Registered User
    edited March 2011
    Thank you for the replies.

    The debt is mostly credit card based (mistakes were made that were so stupid, they border on being criminal) with some various bills that I've failed to pay in the last few months while trying to find work. No part of the debt is student loan based.

    As far as my earnings go, I'm probably going to be making ~$24,000 before taxes. One might ask how I obtained over $20,000 in credit despite making less than that a year, and the only reason I can think of is that during a period starting approximately 6 months before receiving an offer for my credit card, a mysterious lump sum of $17,500 was deposited into my bank account, being young and not knowing what to do, I did absolutely nothing with it. I didn't mention it to the bank, I never went below the amount of it in my bank account and one day about 4 months later it disappeared as quickly as it appeared.

    As for why I'm considering bankruptcy, someone mentioned that I look into it. I would never have considered it an option otherwise.

    Baslbc on
  • RikushixRikushix Registered User regular
    edited March 2011
    Baslbc wrote: »
    Thank you for the replies.

    The debt is mostly credit card based (mistakes were made that were so stupid, they border on being criminal) with some various bills that I've failed to pay in the last few months while trying to find work. No part of the debt is student loan based.

    As far as my earnings go, I'm probably going to be making ~$24,000 before taxes. One might ask how I obtained over $20,000 in credit despite making less than that a year, and the only reason I can think of is that during a period starting approximately 6 months before receiving an offer for my credit card, a mysterious lump sum of $17,500 was deposited into my bank account, being young and not knowing what to do, I did absolutely nothing with it. I didn't mention it to the bank, I never went below the amount of it in my bank account and one day about 4 months later it disappeared as quickly as it appeared.

    As for why I'm considering bankruptcy, someone mentioned that I look into it. I would never have considered it an option otherwise.

    Wait a second. Are you saying you spent a whole bunch of money through credit cards and other lines of credit because you had this huge sum of money in your bank account? So when they took it away, you were left with these debts you were expecting to be able to pay? I'm a little confused here.

    Rikushix on
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  • OnTheLastCastleOnTheLastCastle let's keep it haimish for the peripatetic Registered User regular
    edited March 2011
    Not that it makes more sense, but what he is saying is he thinks he was able to get the credit cards because companies knew he had a lot of money in the bank for awhile.

    But they didn't. Unless you declared it somehow. And... your whole story is freaking weird.

    OnTheLastCastle on
  • BaslbcBaslbc Registered User
    edited March 2011
    Not that it makes more sense, but what he is saying is he thinks he was able to get the credit cards because companies knew he had a lot of money in the bank for awhile.

    But they didn't. Unless you declared it somehow. And... your whole story is freaking weird.

    Yes, this is, infact, what I suspect.

    The bank is TD Canadatrust, who offered me a TD Visa, while I was doing something unrelated at the bank.

    Baslbc on
  • RikushixRikushix Registered User regular
    edited March 2011
    Ah. Well, I believe it would be hard to make a case for the fact that you were offered a line of credit based on an banking error that was in TD's fault, because you ended up accepting the card and getting up to all sorts of spending tomfoolery. I don't think you can defend yourself by saying "You should have known I wasn't eligible to have this level of credit available to me!"

    I suppose it's a lesson learned. It's good that you didn't see the money in your account and immediately go and blow it all directly, but in retrospect you probably should have alerted TD to the error.

    Which is too bad, really, because TD is fantastic and I really like TD's Visa programs.

    Rikushix on
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  • BaslbcBaslbc Registered User
    edited March 2011
    Well, it really is a lesson learned. Like I said earlier, it was massive mistake, that I can say I truly learned something from.

    As for the large amount of money, I DID see the money the same day it was deposited, I simply chose not to do anything or say anything about it until its eventual disappearance.

    Thanks to all the posters in this thread, it was informational, and I've quite made up my mind on the topic.

    Baslbc on
  • OnTheLastCastleOnTheLastCastle let's keep it haimish for the peripatetic Registered User regular
    edited March 2011
    Which is to not file for bankruptcy and to live within your means while you pay off the debt... right?

    OnTheLastCastle on
  • ZeonZeon Registered User
    edited March 2011
    Why cant you get a job paying more than minimum wage? All my calculations were based on 8.50 which is the BC minimum wage now.

    Even if you have no skills you could get a job working construction that pays 15 or more dollars an hour. Or you could apprentice in something now, like carpentry, or masonry, or plumbing, or whatever, and make minimum wage or just above now and a hell of a lot more in 2 or 3 years. Or move to alberta and make a killing working in the oil industry driving a truck or working the rigs. Or, you know how to type. Why not be a secretary or do data entry or something?

    Or you can be lazy and file for bankruptcy and still probably end up paying off the debts through court mandated wage garnishing, which will put you well, well below minimum wage. Not to mention you will not be able to get credit for a very, very long time. If you choose this route, i hope you enjoy eating for less than 10 dollars a week, living in the shittiest of shit apartments and never, ever going out, because you'll be doing that for a long, long time.

    25,000 dollars is not a huge amount of money. If you had 75,000 or even 50,000 in debts it might be a better option. But man, you are gonna end up kicking yourself in 10 years when your possible future wife is pissed off you cant get a house because you dont qualify for a loan, or when you cant buy a car or when an employer doesnt hire you all because you have shit credit.

    What you should do now is call the bank first and try to work something out with them. Explain what happened. Theyll most likely try to work something out with you, rather than possibly get stiffed and have to take you to court over the money. Filing for bankruptcy is a last resort, when all options have run out. You have plenty of options and if you purposefully choose not to explore them, youre going to end up screwing yourself over and probably getting screwed over by the courts as well.

    Zeon on
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  • CorvusCorvus . VancouverRegistered User regular
    edited March 2011
    This seems like a fairly small amount of debt to go into bankruptcy over. I'd urge you to check out credit counselling, there are non profits around in BC that should be able to help you figure this out.

    Corvus on
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  • RikushixRikushix Registered User regular
    edited March 2011
    Yeah, I see ads all over Translink busses for non-profit, government-sponsored credit counseling and I've heard great things.

    What do you have to lose?

    Rikushix on
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  • JohnnyCacheJohnnyCache Starting Defense Registered User regular
    edited March 2011
    some more questions

    what are your bills

    what do you pay for

    rent
    phone
    internet
    car
    other

    and then what different cards do you have with on them

    and how many hours are you working

    and are your still in school? (college is the most likely reason you were offered cards by the way, they like to hook a college kid)

    JohnnyCache on
  • ApogeeApogee Lancks In Every Game Ever Registered User regular
    edited March 2011
    Banker here. In Ontario though, so the laws might be a bit different.

    So: Bankruptcy. This is something that I'd avoid at all cost. Bankrupt clients do not get credit, period, for 2 years. Most don't get credit for 7 years (and that's after settling the debt, not declaring it).

    That said, you have a lot of debt, and it's credit card debt, the worst sort. First thing I'd do is call TD and close all your cards, and consolidate it into a loan. Your interest rate should be around 12%, which is miles better than the 20% or more you are paying now. Then just pay the loan. Money will be tight, but it's simple and it'll let you still be able to borrow in the future. If TD won't lend to you, call Visa directly and consolidate through them. It won't be as good a rate, though.

    You may want to keep a Visa with a $1,000 limit on it just for purchases that require a CC - stuff like Steam. CC laws in Canada stipulate that they cannot increase your limit without your permission, so you wont be tempted by the credit limit going up.

    Honestly your situation is just going to take a couple of years paying that off. Cut whatever you can in expenses, live lean, and get a better job if at all possible. Minimum wage sucks :(.

    Apogee on
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  • saggiosaggio Registered User regular
    edited March 2011
    Be warned that declaring bankruptcy will cause problems for you if you ever go back to school and take out a student loan.

    saggio on
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  • AridholAridhol Daddliest Catch Registered User regular
    edited April 2011
    All I can do is echo the statements that $25,000 sure seems like a lot of money when you make less than that a year but it's crazy to file bankruptcy over.

    It will be really hard but you can pay that off with some help and advice from your banking institution and when it's all gone you'll probably have some better money management skills to move forward with.

    Aridhol on
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