2 Big Questions You May Have Before Filing For Bankruptcy
If your life took some unexpected twists and turns that left you with heaps of debt, you can make the decision to do something about this. There are several options, but a visit to a bankruptcy trustee might be the best step you ever take. This appointment will give you a chance to ask questions, and you will learn the answers to all of your questions–even the toughest ones. Here are two things you may want to ask about before you decide to file for bankruptcy.
What Happens to Student Loans?
Going to college is a great way to better yourself and have more opportunities in life, but it can also leave you with a lot of loans. Student loans can be hard to repay, especially if you cannot find a good enough job. Through bankruptcy, you might have hope though.
Filing bankruptcy does not automatically discharge student loan debt, but it can. It really depends on the age of the debt. Your bankruptcy trustee will want to know how old the debt is and when you last attended college with the loans. This is important because:
- If seven years has passed since you were a student, the student loan debt can be included in the bankruptcy. This means that the debt will most likely be discharged, as long as you qualify for bankruptcy.
- If it has not been seven years, you may not be able to include any of it in your bankruptcy.
Now, there is one exception according to the Office of the Superintendent of Bankruptcy Canada. If five years has passed and you are struggling with a major hardship in life, the court may allow a discharge of the debt. This decision is purely based on how the court feels you acted with the loan proceeds, and on how having this debt would affect your financial future.
The other option available is to apply for the Repayment Assistance Plan (RAP). If you do not qualify for a discharge of your student loans, this program may lower the amount you owe. When a person qualifies for this program, the person will only have to repay what he or she can comfortably pay back.
With all of these options, there is a good chance that you may be able to get by without repaying your student loans, but it will depend on your individual situation.
What Happens to Tax Debt?
Owing money to the Canada Revenue Agency (CRA) is not a good thing. This agency has the power to come after you to get the money owed, and there is not much you can do to stop this. Through bankruptcy however, you may have a way to settle or eliminate the debts you owe to the CRA.
Many people believe that this type of debt can never be included in bankruptcy, but this is not the case. A bankruptcy trustee will be able to review your situation and tax debts, and he or she will tell you whether or not this debt can be discharged. There are times when you can include tax debt in bankruptcy, but it depends on the events and situations in your life.
If the trustee cannot find a way to include this in your bankruptcy, there might be another option. Your trustee might be able to work out a repayment or settlement plan. Through this, the CRA might agree to wipe away all of the interest and penalties you owe, and they may also agree to lower the amount of tax debt you must repay.
If most of the debt you owe is for these two things, it is important for you to find out if they can be discharged through bankruptcy. The best way to do this is by scheduling an appointment with a bankruptcy trustee from a company like Faber in your area.