{"id":14299,"date":"2020-09-10T18:41:57","date_gmt":"2020-09-10T18:41:57","guid":{"rendered":"https:\/\/nomoredebts.org\/?p=14299"},"modified":"2025-02-25T06:11:03","modified_gmt":"2025-02-25T14:11:03","slug":"7-bankruptcy-myths","status":"publish","type":"post","link":"https:\/\/nomoredebts.org\/blog\/bankruptcy\/7-bankruptcy-myths","title":{"rendered":"7 Bankruptcy Myths & Facts in Canada"},"content":{"rendered":"

[et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” background_color=”#e7dff3″ custom_padding=”0px||90px|||” bottom_divider_style=”ramp2″ bottom_divider_color=”#ffffff” da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” custom_padding=”||0px|||” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.27.4″ header_line_height=”0.9em” header_2_font_size=”30px” custom_padding=”||16px|||” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

How Bad Is Bankruptcy in Canada? 7 Myths & Facts<\/h1>\n

By Julie Jaggernath<\/em>[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”1_2,1_2″ module_class=”custom_row” _builder_version=”4.16″ _module_preset=”default” custom_padding=”0px||0px|||” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”1_2″ module_class=”vertical-align second-on-mobile” _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.16″ _module_preset=”default” custom_margin=”||13px|||” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

Bankruptcy\u00a0<\/strong>one of the first things that comes to mind for many Canadians who are experiencing financial difficulty, even though they are not really sure what the\u00a0bankruptcy process<\/a>\u00a0is. This misunderstanding is compounded by the fact that most people aren\u2019t aware that there are\u00a0alternatives to bankruptcy<\/a>. Due to all of the\u00a0questions people ask us about bankruptcy<\/a>, we thought we’d list our answers and provide the facts to address some of the questions, myths and misconceptions we hear most often:<\/p>\n

[\/et_pb_text][et_pb_text _builder_version=”4.16″ _module_preset=”default” custom_margin=”0px||||false|false” custom_padding=”0px||||false|false” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

    \n
  1. Bankruptcy is an Easy Way Out<\/a><\/li>\n
  2. Anyone Can File for Bankruptcy<\/a><\/li>\n
  3. It’s the Only Option You Have When Finances Get Really Bad<\/a><\/li>\n
  4. All Debts Are Included in Bankruptcy<\/a><\/li>\n
  5. You Lose Everything<\/a><\/li>\n
  6. Only Poor People Go Bankrupt<\/a><\/li>\n
  7. You Can Max Out All of Your Credit Cards and Then Go Bankrupt<\/a><\/li>\n<\/ol>\n

    [\/et_pb_text][\/et_pb_column][et_pb_column type=”1_2″ module_class=”first-on-mobile” _builder_version=”4.16″ _module_preset=”default” animation_style=”slide” animation_direction=”right” animation_intensity_slide=”2%” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_image src=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/09\/keeping-informed-and-reading-facts_2colm.jpg” alt=”A woman researches bankruptcy on her laptop” title_text=”keeping-informed-and-reading-facts” _builder_version=”4.16″ _module_preset=”default” border_radii=”off|200px|20px|200px|20px” box_shadow_style=”preset1″ global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_image][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” background_color=”#ffffff” custom_padding=”||120px|||” bottom_divider_style=”curve2″ bottom_divider_color=”#e4f8e0″ bottom_divider_height_tablet=”70px” bottom_divider_height_phone=”50px” bottom_divider_height_last_edited=”on|phone” da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

    Myth No. 1 – Bankruptcy Is an Easy Way Out<\/h2>\n

    Declaring bankruptcy<\/a>\u00a0is not an easy way to get out of your\u00a0financial problems<\/strong>\u00a0or to fix your credit<\/a>. The reality is that when a person\u00a0files for bankruptcy<\/strong>\u00a0it is recorded on their\u00a0credit bureau report<\/a>\u00a0and stays there for over 6 years. During this time, it will be very difficult to obtain credit. Bankruptcy also has a huge emotional cost. Feelings of shame and regret can remain with a person long after the information has been removed from their credit report.<\/p>\n

    [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” background_color=”#e4f8e0″ custom_padding=”||125px|||” bottom_divider_style=”curve2″ bottom_divider_color=”#ffffff” bottom_divider_height_tablet=”70px” bottom_divider_height_phone=”50px” bottom_divider_height_last_edited=”on|phone” da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

    Myth No. 2 \u2013 Anyone Can File for Bankruptcy<\/h2>\n

    Public perception seems to be that anyone can\u00a0go bankrupt<\/a>. While bankruptcy is a viable option for some people, there are\u00a0costs and fees for declaring bankruptcy<\/a>\u00a0and it is not the right solution for everyone. Depending upon your income level and the assets that you own, it can be a\u00a0very expensive<\/strong>\u00a0way to resolve your financial problems.<\/p>\n

    [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.22.0″ _module_preset=”default” background_color=”#ffffff” custom_padding=”||120px|||” bottom_divider_style=”ramp2″ bottom_divider_color=”#E7DFF3″ da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.22.0″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

    Myth No. 3 – It\u2019s the Only Option When Your Finances are Really Bad<\/h2>\n

    There are\u00a0alternatives to bankruptcy<\/strong>\u00a0which include\u00a0debt management programs<\/a>,\u00a0orderly payment of debts<\/a> (only available in Alberta and Nova Scotia), informal consumer settlement proposals<\/a>\u00a0as well as formal\u00a0consumer proposals<\/a>,\u00a0refinancing your home<\/a>\u00a0and\u00a0debt consolidation<\/a>\u00a0options. The right solution will depend on an individual\u2019s specific situation. If someone is interested in finding out about alternatives to bankruptcy, they should speak with a credit counsellor from a properly licensed and accredited credit and debt counselling\u00a0organization.<\/p>\n

    [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ next_background_color=”#ffffff” _builder_version=”4.16″ _module_preset=”default” background_color=”#e7dff3″ custom_padding=”||120px|||” bottom_divider_style=”curve2″ bottom_divider_height_tablet=”70px” bottom_divider_height_phone=”50px” bottom_divider_height_last_edited=”on|phone” da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” custom_padding=”||0px|||” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.27.0″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

    Myth No. 4 \u2013 All Debts Are Included in a Bankruptcy<\/h2>\n

    There are\u00a0debts not included in a bankruptcy<\/a>.\u00a0Secured debts\u00a0<\/strong>like a mortgage or car loan cannot be included in a bankruptcy<\/a>. Student loans are generally excluded from a bankruptcy if it has been less than 7 years from when someone stopped studying. This rule is in place to help ensure that the student loan system is available to everyone who qualifies to use it. Declaring bankruptcy on\u00a0joint debts<\/a>, even\u00a0debts in divorce<\/a>,\u00a0will impact the other borrower.<\/p>\n

    [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” custom_padding=”||0px|||” da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

    <\/a>Myth No. 5 \u2013 You Lose Everything<\/h2>\n

    When you go bankrupt<\/strong> you don\u2019t literally lose everything. Most provinces allow you to keep your clothing and basic household furniture as long as their value doesn\u2019t exceed certain provincial limits. You are also allowed to keep necessary medical and health related equipment. Some provinces have provisions that allow you to keep a modest priced vehicle and your home as long you don\u2019t have a lot of equity in them. Equity is the market value of an asset minus what you owe against it. You may also be able to keep the tools of your trade that you need to earn a living, as long as they do not exceed a certain amount.<\/p>\n

    Going bankrupt in Canada also doesn’t mean that you will end up in mortgage foreclosure<\/a>. There are difference between bankruptcy in Canada versus the States<\/a>.<\/p>\n

    [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ prev_background_color=”#ffffff” _builder_version=”4.16″ _module_preset=”default” background_color=”#E4F8E0″ custom_padding=”170px||30px|||” top_divider_style=”ramp2″ top_divider_flip=”horizontal” top_divider_height_tablet=”70px” top_divider_height_phone=”” top_divider_height_last_edited=”on|phone” da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

    Myth No. 6 \u2013 Only Poor People Go Bankrupt<\/h2>\n

    Financial problems<\/a>\u00a0can impact anyone; people with modest incomes, high income earners and anyone in between. Generally speaking, the more you earn, the higher the likelihood that you have a lot of debt. Bankruptcy however, is a legal process to help anyone who is\u00a0insolvent<\/a><\/strong>, meaning anyone who is not able to pay their obligations.\u00a0<\/p>\n

    [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ next_background_color=”#ffffff” _builder_version=”4.16″ _module_preset=”default” background_color=”#e4f8e0″ custom_padding=”29px||130px|||” bottom_divider_style=”curve2″ da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

    Myth No. 7 \u2013 You Can Max Out Credit Cards & Then Go Bankrupt<\/h2>\n

    Quickly making a few large purchases to max out credit cards and then declaring bankruptcy will jeopardize working with a\u00a0bankruptcy trustee<\/a>\u00a0and\/or being discharged from the bankruptcy process. Creditors may also oppose a person’s application to be discharged from their bankruptcy, possibly leaving them in a very difficult situation. Your\u00a0trustee and your creditors<\/a>\u00a0play an important role in helping you obtain your\u00a0discharge<\/a>.<\/p>\n

    [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” background_color=”#ffffff” custom_padding=”||130px|||” bottom_divider_style=”ramp2″ bottom_divider_color=”#e7dff3″ da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

    Decide If Bankruptcy Is Right for You
    It Is One Option of Many<\/span><\/h2>\n

    Canadian bankruptcy laws<\/a>\u00a0are designed to provide legal protection for\u00a0people in severe financial hardship<\/a>\u00a0and to give them an opportunity for a fresh start. Bankruptcy should always be looked upon as a solution of last resort. You owe it to yourself to carefully explore all of your options and the implications of each to determine what\u2019s right for you.<\/p>\n

    [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.16″ _module_preset=”default” background_color=”#e7dff3″ custom_padding=”||110px|||” bottom_divider_style=”curve2″ bottom_divider_color=”#5b25af” bottom_divider_flip=”horizontal” da_disable_devices=”off|off|off” global_colors_info=”{}” theme_builder_area=”post_content” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_2,1_2″ make_equal=”on” module_id=”get-cell-phone” module_class=”custom_row” _builder_version=”4.16″ width_tablet=”70%” width_phone=”80%” width_last_edited=”on|phone” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”1_2″ module_class=”vertical-align second-on-mobile” _builder_version=”4.16″ animation_direction=”left” custom_css_main_element=”margin: auto;” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_text _builder_version=”4.27.2″ header_3_font_size=”30px” custom_padding=”24px|||||” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n

    Contact Us for More Information About Bankruptcy<\/h3>\n

    If you would like more information about\u00a0bankruptcy in Canada<\/strong>\u00a0and aren’t sure if it’s the right option for you, please contact us for help. One of our\u00a0credit counsellors<\/a>, will be happy to answer your questions and review your situation. We are a 100% free and confidential service and you are under no obligation. You can book an appointment with us and the counsellor will review your whole financial situation and give you objective, non-judgemental guidance to help you resolve your situation. The sooner you contact us, the sooner we can help relieve your stress and worry. Call us at\u00a01-888-527-8999<\/a>,\u00a0email us<\/a>, or\u00a0chat with us online<\/a>\u00a0right now.<\/p>\n

    Last Updated on February 25, 2025 <\/span><\/p>\n

    [\/et_pb_text][\/et_pb_column][et_pb_column type=”1_2″ module_class=”first-on-mobile” _builder_version=”4.16″ animation_style=”slide” animation_direction=”right” animation_intensity_slide=”2%” custom_css_main_element=”margin: auto;” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_image src=”https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/09\/contacting-over-the-phone_2colm.jpg” alt=”A man speaks with a credit counsellor over the phone” title_text=”contacting-over-the-phone” align_tablet=”center” align_phone=”” align_last_edited=”on|phone” _builder_version=”4.16″ max_height=”500px” max_height_tablet=”600px” max_height_phone=”” max_height_last_edited=”on|phone” custom_margin_tablet=”||-35px||false|false” custom_margin_phone=”||-45px||false|false” custom_margin_last_edited=”on|phone” border_radii=”off|200px|20px|200px|20px” box_shadow_style=”preset2″ global_colors_info=”{}” theme_builder_area=”post_content”][\/et_pb_image][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"

    We set the facts straight and expose the 7 most common myths about bankruptcy in Canada. Bankruptcy is a last resort & isn’t for everyone. 1-888-527-8999<\/p>\n","protected":false},"author":6,"featured_media":15646,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"categories":[19],"tags":[],"class_list":["post-14299","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bankruptcy"],"yoast_head":"\nHow Bad Is Bankruptcy in Canada? | Credit Counselling Society<\/title>\n<meta name=\"description\" content=\"How bad is bankruptcy in Canada? Uncover 7 common myths, get the facts, and learn if it\u2019s truly a last resort. Make informed decisions about your finances.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nomoredebts.org\/blog\/bankruptcy\/7-bankruptcy-myths\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"7 Bankruptcy Myths & Facts in Canada\" \/>\n<meta property=\"og:description\" content=\"We set the facts straight and expose the 7 most common myths about bankruptcy in Canada. Bankruptcy is a last resort & isn't for everyone. 1-888-527-8999\" \/>\n<meta property=\"og:url\" content=\"https:\/\/nomoredebts.org\/blog\/bankruptcy\/7-bankruptcy-myths\" \/>\n<meta property=\"og:site_name\" content=\"Credit Counselling Society\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/nomoredebts\" \/>\n<meta property=\"article:published_time\" content=\"2020-09-10T18:41:57+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-25T14:11:03+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/nomoredebts.org\/wp-content\/uploads\/2020\/09\/keeping-informed-and-reading-facts_2colm.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"600\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Kevin Sun\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@CrdtCounselSoc\" \/>\n<meta name=\"twitter:site\" content=\"@CrdtCounselSoc\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Kevin Sun\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"How Bad Is Bankruptcy in Canada? | Credit Counselling Society","description":"How bad is bankruptcy in Canada? 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