Every year, millions of individuals find themselves facing insurmountable financial debts. For some, these financial hardships aren’t the outcome of poorly planned strategies or wrongdoings; in many cases, a family member dies, a business shuts down, or an accident occurs. For the average human being, life can be perfect at one moment and in turmoil in the next. When faced with financial troubles, you can result in either debt counselling or filing for bankruptcy.

In debt counselling, one works with a debt consolidation service, which assists in managing the debt. Although debt consolidation has the benefit of discretion, it may not help individuals who have overwhelming financial debts. In cases where the financial debts are too many, filing for bankruptcy is the only feasible option.

Automatic Stay

One of the boons to declaring bankruptcy in Alberta is the statutorily created automatic stay. Put simply, it is a court order that makes it illegal for creditors to carry out collection activities. The popular collection activities ceased by an automatic stay include telephone calls, demand letters, foreclosures, repossessions and garnishment of wages. A wage garnishment refers to when a creditor gets a court order for your employer to pay a portion of your income directly to them. Creditors who violate the automatic stay court order risk being charged with legal actions and fines.

Discharge

The prime purpose of filing bankruptcy is to receive the advantage of a discharge from eligible unsecured loans such as credit card balances. The discharge, which is listed in federal bankruptcy laws, lifts the obligation of debt repayment from debtors. It also removes any information records associated with charge-offs or past due balances from a debtor’s credit report. Bankruptcy also aids in managing secured loans such as home mortgages, and car payments, which cannot be dealt with under the debt counselling option.

Retention of Assets

Once a debtor files bankruptcy in Alberta, some of the assets are protected from being seized and liquidated. Typically, automobiles up to a certain value, some clothing, household furnishings, life insurance, pets, a portion of the earned salary, and retirement accounts are incorporated into the scope of exempted property. The exemptions differ from one state to another, so be sure to learn the regulations applicable in your region. Also, the government can offer protection from discrimination, to a debtor who has filed for bankruptcy. The company owner, for instance, has no right of firing an employee solely because of a bankruptcy filing.

Reorganization

When you declare bankruptcy, the court allows you to pay your debt over a particular period. In most instances, the debtor is allowed up to five years to settle the debt. This debt is paid in monthly installments, which are usually given to the bankruptcy court trustee. If the period of repayment is overdue, car loan payments can be included so as to prevent repossession activities. The good news is that your court trustee can always negotiate the payment plans with your creditors, to help bring past due balances current.

Get a Fresh Start

The main reward that bankruptcy laws provide a debtor is a new beginning; the opportunity to live your life without worrying about overwhelming debt. Once the court offers you a discharge, your financial slate gets wiped clean. You can commence rebuilding your credit status and also start over financially.

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