If you are struggling with debt, a day probably never goes by when you are not thinking about your financial challenges. If you are considering bankruptcy to help you manage your financial situation and have your unsecured debts wiped away, there are some significant numbers to take into account.
This is the minimum amount of debt you must have to file for bankruptcy. If you have more debt than this that you cannot repay in a reasonable time, filing for bankruptcy may be an option worth considering.
Twenty-one months refers to the length of time you may need to pay surplus income payments if this is your first bankruptcy filing. If it is your second or subsequent time filing, you can be paying for longer than 21 months.
Surplus income refers to any income in excess of what you need to maintain a reasonable standard of living. If you have surplus income over $200 per month, you will make monthly payments toward paying off part of your debt.
Bankruptcy will stay on your credit report for six years after the discharge for both main credit bureaus. However, if you are in Ontario, TransUnion will remove a bankruptcy from your credit report after seven years.
During this time, parties like banks, credit card companies and landlords can refer to the bankruptcy filing when making certain decisions about you. As such, during this time, you could have some difficulty when it comes to borrowing money or renting property.
After nine months, your bankruptcy trustee can ask the courts to release you from the bankruptcy process if you have completed all the necessary requirements. If you make surplus payments, you can be eligible for this automatic discharge after 21 months.
However, if you have filed for bankruptcy before, this timing extends to 24 or 36 months, depending on whether you make surplus income payments.
After filing for bankruptcy, your credit rating or score will drop to around 300, which is the lowest possible score. While this might be distressing, there are numerous strategies and tools that can help you increase your score after filing.
These numbers can help you assess how bankruptcy might affect you now and in the long run.