Filing for bankruptcy

Filing for bankruptcy is one of those things nobody talks about. Because it’s telling the world that you’re not good with money.

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I’m the first to admit that I’m not good with money. Mine, at least. Put me in a position where I’m responsible for collecting money, however, and you couldn’t find a more trustworthy individual.

My first introduction to the option of bankruptcy was when I ran my own business. I was still with my ex-husband at the time and we were struggling living on just his income. Yes, my business was making money, but we were putting all the profits right back into the business. Mistake number one.

Anyway, we sought the assistance of a credit counselling society, who recommended that we either file for bankruptcy or I close my business. If you’ve ever been a business owner, you’ll be familiar with the feeling of unrealistic optimism that first-time business owners have. My business was going to succeed if it killed me. Mistake number two.

Getting to the point where filing for bankruptcy is your best option is similar to turning to income assistance. You’ve explored every other possible option. I was at a point where I was not paying one bill in order to pay another, was several months behind on bills, couldn’t put gas in my car because I needed that money for food and then lost my income all together.

I’ve never understood why people who can’t pay bills are penalized financially. We already get that we don’t have enough money. Well, guess what? In order to file for bankruptcy, you have to pay $1800. How’s that for irony?

I struggled internally for months before I ended up filing. I felt like I’d failed as a daughter, as a person who keeps their word, as a contributor to society, as a provider for my child. I had a loan out that my dad had co-signed and I didn’t want him to be responsible for it. He is now paying it off.  I had to borrow money from my mom in order to pay the bankruptcy fees and pay my landlord $495 in utility fees I owed. I had to return my 2007 car, for which I’d never missed a payment until April 2012. I had just $2700.00CAD left on the lease.

Filing for bankruptcy was rather anti-climatic. My bankruptcy trustee had failed to tell me to get a bank account elsewhere, so imagine my surprise when all my accounts were frozen. I continued to get threatening notices from my creditors. I had a small window in which my credit rating was still good so that I could find a new cell phone and internet company.

Bankruptcy requirements in BC are surprisingly minimal:

  • I had to attend 2 counselling sessions with a debt counsellor; one at the beginning to make sure I knew how to create a budget and tips on where to cut expenses and one at the end to make sure I was still on track.
  • I could make up to $2499.00CAD before some of those funds would be rerouted to my creditors.
  • I had to file monthly income and expense statements.

Nine-months later, I’ve been released from bankruptcy, which basically means I’ve proven that I can’t pay back my creditors and I no longer have to file monthly income and expense statements. For the next seven-years, I have a bad credit rating.

Have I learned from my mistakes? Absolutely. I’ve learned that:

  • Filing those monthly income and expense statements keep me on track.
  • Keeping creditors up-to-date with your financial situation often makes them much more accommodating.
  • Two counselling sessions are not enough.
  • Much of I what I learned I already knew.
  • None of the requirements of filing for bankruptcy include how to deal with the emotional turmoil I experienced.

Why is there such a big gap between what income assistance considers to be enough to live on and what Bankruptcy Canada considers enough to live on?

Have you ever filed for bankruptcy? If so, what was your experience like?

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