Questions to ask your Personal Bankruptcy Advisor

In Canada, to file personal bankruptcy you meet with a bankruptcy trustee. In the United States, you meet with a bankruptcy attorney. Regardless of who you meet with, there are some basic questions you should ask.

First, find out how personal bankruptcy will impact on you. How will to impact on your credit, and your ability to borrow again in the future.

Second, ask how much filing personal bankruptcy will cost, both for professional fees and for court fees and other filing costs.

Finally, ask about bankruptcy alternatives; personal bankruptcy is a last resort, so be sure you understand all of your options.

Once you have the answers to these questions, you will be able to decide if filing personal bankruptcy is the correct option for you.

Is Credit Counseling Better Than Personal Bankruptcy?

Credit counseling (called credit counselling in Canada) is usually a two step process. First, it involves working with a credit counselor to review your budget and determine your debt management alternatives. The second step is often for the credit counselor to put you on a Debt Management Program where you make monthly payments to your credit counselor, and they distribute the money to your creditors.

It is this second part, the Debt Management Plan, that is often thought of as a bankruptcy alternative.

Credit counseling may be preferable to a personal bankruptcy because you are not required to give up your house or other assets, and you won’t have a bankruptcy appearing on your credit report, so for those reasons credit counseling may be better than personal bankruptcy.

However, with credit counselling you are required to make monthly payments, and you are required to repay your debts in full. If you have lost your job or have a reduced income, or if your debts are too large to repay over a three to five year period, then credit counseling is not for you.

Start by making a monthly budget to see what you can afford to pay. Then, talk to a credit counselor, a licensed bankruptcy trustee if you live in Canada, or a bankruptcy attorney if you live in the United States, and after reviewing your options you can make the decision about whether credit counseling or personal bankruptcy is the correct option for you and your family.