Overwhelming debts, loss of income, and unexpected financial demands can all contribute to a personal financial crisis. If you are unable to repay your debts, and if these debts are mounting, you will benefit from consulting a bankruptcy trustee who will explain all the financial options available.

Here are some facts you should know about bankruptcy:

There are alternatives to bankruptcy

All possible alternatives must be considered before filing for personal bankruptcy. Alternatives consist of:

• Consolidation loans

Depending on your credit rating, you may be able to secure a consolidation loan to spread your payments over a longer time, at a lower rate.

• Negotiation

Negotiating with your creditors for better terms is an option if you expect your financial situation to improve in the near future.

• Proposals

You will need a trustee to make the proposal. This is an offer to your creditors based on your situation, which they may or may not accept but if they do if will give you one monthly manageable payment without interest.

• Bankruptcy

If none of the other options are working, you will need a bankruptcy trustee. You will surrender your assets to your trustee, and receive protection from your creditors.

Not all assets are lost in bankruptcy

Not all assets must be surrendered to the trustee. Essential assets can be kept. These assets are intended to enable to you rebuild your finances, and include the tools of your trade, personal items, clothing and furniture, and pensions. Your car may be exempt, too. Your trustee will advise you.

Not all debts are erased in bankruptcy

Bankruptcy erases only unsecured debts, like credit card balances, unsecured loans, income tax arrears. Debts secured by assets, like your car or house, are not covered by bankruptcy as the lender already has security. A lender cannot seize you property simply because you filed for bankruptcy. If you can keep paying the mortgage the lender will not repossess. Student loans less than 7 years from your last exam are also not erased by bankruptcy.

Your credit rating is affected

If you are filing for personal bankruptcy, you probably already have a bad credit rating or headed in that direction. It can take several years to restore your rating. You can start immediately, however, by making all necessary payments on time.

Your bankruptcy can be discharged in 9 months

If it is your first bankruptcy, you could be eligible for a discharge in 9 months if you complete your duties and depending in your average income. Source used in researching this article include the Government of Canada: Office of the Superintendent of Bankruptcy Canada.