Family Insolvency Procedures Tips

Massive medical bills, spiralling credit cards, out of control student loans can make the strongest among us weak in the knees.  If only there was some magical phrase you could just shout to make it all disappear…

If you can relate to this then you are at the right place and hopefully at the right time.

What is Insolvency?

Before we begin, we need to introduce to you the term “Insolvency”.

Insolvency is a state of being in which you’re incapable of meeting your financial obligations. So, when you find yourself in a situation where you are not able to make your loan payment as of that point you are also in default. Or, to put it differently, default is a specific event in which the debtor fails to make an agreed-upon payment to his creditor at an agreed-upon time. Often the insolvency is seen as a figurative death. But, sometimes it can also be a rebirth.

There are several types of insolvency procedures. One of them is bankruptcy, and now we will make sure that you have all the information you need about this solution.

First of all, we need to be aware that, unfortunately, bankruptcy is not just a word that you declare and all your debts disappear. It is a complicated legal status that is designed to provide relief to those who are financially insolvent. To understand this better you need to talk with experts like the Pennsylvania bankruptcy lawyer.

So, if you have cut your expenses down to a barebones lifestyle and still can’t make minimum payments on your loan, it might be time to think about bankruptcy. It is a serious step and how much it can help you depends on your situation. And before making that big decision you need to know all the good and the bad sides of it.

Here are some pros and cons of bankruptcy that you should consider before filing it. 

The pros of bankruptcy

There is one main reason why you should consider filing bankruptcy and that is to eliminate your debt. Bankruptcy covers unsecured debt things like credit cards, payday loans, tax debts, and even student loans that are guaranteed by the government if you’ve been out of school for more than seven years. 

Bankruptcy gives you protection from your creditors so as a result, things like collection calls will stop, no more phone calls and even if you have a wage garnishment when you file bankruptcy you can stop it and prevent future wage garnishments. As a result of filing bankruptcy, you can be debt-free in as little as nine months.
So bankruptcy truly can be a fresh financial start. 

The cons of bankruptcy

Now there are some downsides to filing bankruptcy. You do lose your non-exempt assets. However, for most people most assets are exempt. Things like your personal belongings, an inexpensive car and even in most cases you can keep your RRSP.

You are required to make a payment each month based on your income while you’re bankrupt. The government sets a limit and if your income goes above that limit the payment increases.

There are some duties you’re required to perform. Including making those payments based on your income, attending credit counseling sessions, and sending a monthly budget. 

A lot of people say that that’s actually a good thing and they are really happy to attend those two credit counseling sessions where they meet with credit counselors and they’ve got one on one opportunities to get some advice on how to manage their money better.  A lot of people also say that they don’t know where all their money goes and they have never actually tracked it.

So, the good thing is that by filling out that monthly budget each month, you see exactly where your money goes and you are able to make adjustments and manage your money better. 

There will be a note on your credit report that will stay there in case of the first bankruptcy for up to seven years. And a lot of people think that that means they will never be able to borrow money again. Well, that is not true and there are possibilities to make purchases online on the internet, while you are bankrupt by doing things like getting a secured credit card or a prepaid credit card, or a debit card. There are plenty of other reliable insolvency solutions out there, too.

There are some debts that are not included in bankruptcy. They don’t go away. Things like court fines or alimony or child support or student loans if you’ve been out of school for less than seven years. However, most unsecured debts are included.



You need to know that bankruptcy is not a simple or fast process. Filing and acceptance can take many months. But, if it is used as the last resort, it can offer you the relief you need. It might put you through the wringer but at some point, it will end and you can start over. Keep in mind that the decision should be made only with competent legal advice from an experienced bankruptcy attorney after a full review of all the relevant facts of your case. 

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