Q.Personal bankruptcy: How much does it cost and what are its consequences?

A.It may cost an individual between $1,400 and $1,700 to file for personal bankruptcy.

When you file for personal bankruptcy you surrender all your personal possessions to the bankruptcy trustee except for certain property that is exempt from seizure in your province. The property transferred to your trustee is sold and the proceeds of sale are distributed to your creditors.

The major advantage of personal bankruptcy is the elimination of most, if not all, of your unsecured debts. Certain unsecured debts survive bankruptcy. These include spousal support and child support, fines, some government overpayments and student loans where the bankrupt ceased to be a student less than 10 years ago. Your secured creditors are not affected by your bankruptcy.

Personal bankruptcy is not particularly attractive for some people, especially individuals with significant assets such as equity in a home or significant incomes, particularly high-income earners with few dependents who may be required to pay monies deemed as "surplus income". Because a bankrupt may lose property and have difficulty obtaining credit for many years following discharge from bankruptcy personal bankruptcy should be seen as a last resort.

Before you consider filing for personal bankruptcy you may want to speak to Mark Silverthorn to discuss debt relief and ways to avoid bankruptcy.

You may also want to purchase a copy of Mark Silverthorn's e-book titled A How-to Guide for Dealing with Collection Agencies in Canada which contains a major review of a consumer's 8 options for dealing with debts.