When to declare bankruptcy?

When is the right time and possible reasons to contact an insolvency professional to analyze your financial situation?

Are you facing financial troubles and wondering if bankruptcy is the only or best solution for you? Considering bankruptcy is a big decision that primarily requires a thorough analysis of your financial situation. At Jean Fortin, we generally recommend bankruptcy as a last resort, only after exploring all other options to settle debts.

Some reasons for declaring bankruptcy

  • Overwhelming debts
  • Legal action by creditors
  • Inability to cover basic needs
  • Intense emotional stress
  • Failure of other debt reduction strategies
  • No prospects of improvement

These are some of the situations experienced by individuals who have consulted us. Because of their financial incapacity to opt for another solution, bankruptcy was the best way to settle their debt problems:

  • Overwhelming debts: If, after assessing your financial situation, it’s clear that you can’t pay off your debts in the foreseeable future.
  • Legal actions by creditors: If creditors are taking legal actions against you, like wage garnishment, seizing your assets, or imposing a legal mortgage and you cannot negotiate acceptable payment terms with them.
  • Inability to cover essential needs: If debt repayment is so burdensome on your budget that it prevents you from meeting basic needs like food, housing, or medical care.
  • Intense emotional stress: If the constant pressure from creditors, recurring calls, and the stress of being unable to pay can affect your mental and emotional health, your relationships/family, and your job.
  • Failure of other debt reduction strategies: If you have tried other strategies, like debt consolidation, negotiating with creditors, or a consumer proposal, and these options have either not worked or are unfeasible due to insufficient income.
  • No prospects of improvement: If you see no short or medium-term improvement in your financial situation, such as a better-paying job or an additional income source, and you can’t foresee a time when you’ll be able to repay your debts.

As we mentioned at the beginning of this article, experiencing one of these situations doesn’t mean you should declare bankruptcy. On the contrary, the financial analysis is the very first step in our consultation, aiming precisely to assess your financial capability for a solution other than bankruptcy. It’s only when it’s evident that no other solution is viable that bankruptcy will be considered. People sometimes tend to imagine the worst, and bankruptcy is no exception. In most cases, individuals are often surprised to learn that the consequences are far less severe than they believed.

At all times, the personal finance advisors at Jean Fortin are available to analyze your financial situation and advise on the options available to you. Once informed of all possible choices, their pros and cons, you will be in a position to make an informed decision.

Consultations can be conducted in-person or remotely, as per your preference. They are free, confidential, and come with no obligation.