The Disadvantages of Filing Personal Bankruptcy in Ontario - What Your Trustee May Not Tell You

As a licensed trustee in bankruptcy and the co-founder of Hoyes, Michalos & Associates Inc., one of Ontario's largest personal bankruptcy firms, I have handled many personal bankruptcies over the years. As with every other trustee in Ontario, I earn my living by administering a personal bankruptcy, so it is in my self interest to administer as many bankruptcies as possible.
Of course as a professional advisor I do not want to convince someone to go bankrupt on Ontario if that is not the correct solution for them, so I always explain all options to everyone I meet, and let them decide. If I was a less reputable trustee, what type of information would I not want people to know? What are the disadvantages of personal bankruptcy that a trustee may not want you to know?
For many people the biggest disadvantage to filing personal bankruptcy in Ontario is the fact that the bankruptcy will appear on your credit report for six years after you are discharged from bankruptcy. This means that if at any time in the next six years you want to finance a car, buy a house, or even rent an apartment, the company checking your credit will know that you were bankrupt. A bankruptcy does not automatically disqualify you from getting credit, but you may pay a higher interest rate, or need a security deposit or a co-signer.
The next big disadvantage is that, in Ontario, you may be forced to surrender certain assets if you go bankrupt, such as a valuable car, house, or RRSP.
Finally, while you are bankrupt, which will be for at least nine months, you are required to report your income to your trustee each month, and if your income goes above certain amounts, such as when you work overtime, you are required to make additional payments to the trustee for the benefit of your creditors. In other words, the more you earn, the more you pay, which can significantly increase the cost of a bankruptcy.
Of course if you have more debts than you can handle, and if your wages are about to be garnisheed, these disadvantages may be insignificant compared to the problems you will have if you don't file for bankruptcy. However, you should research your options, using web resources like www.bankruptcy-ontario.org, and then contact a bankruptcy trustee in Ontario for a consultation, and of course ask them to specifically explain to you the disadvantages of filing bankruptcy in Ontario.



J. Douglas Hoyes is a chartered accountant, licensed trustee in bankruptcy, and co-founder of Hoyes, Michalos & Associates Inc., one of Ontario, Canada's largest personal insolvency firms providing credit counselling, consumer proposal, and personal bankruptcy services. Douglas has served as the trustee in over 3,000 personal bankruptcies and consumer proposals. For more information visit http://www.hoyes.com to learn about the advantages and disadvantages of personal bankruptcy in Ontario.