Bankruptcy Canada Article

Key changes in the New Bankruptcy Law

Some major alterations dictated by the new bankruptcy law that have come into effect state the methods of treatment of bankruptcy cases by the people and also by the government. Due to this reason, it would be a good idea for any person who wants to file for bankruptcy to be well informed of the important changes that can influence the new bankruptcy law.

Mandatory credit counseling is one of the major changes. Counseling is now also obligatory for anyone filing for bankruptcy and this must be carried out by government-accredited counselors. This measure exists in order to make people aware of the seriousness of bankruptcy. A lot of people do not properly weigh the advantages and drawbacks of such a decision without counseling. With mandatory counseling, people filing for bankruptcy will hopefully reduce and many more people will be able to have a higher credit rating.

Another major change is about the 'means test', which aspires to prevent people from filing for bankruptcy in order to avoid paying debt. Thanks to this measure, the government hopes to filter individuals filing under Chapter 7 to find out if they really are deep in debt. This measure is destined to make sure that individuals start taking their liabilities a bit more seriously and do not think that filing for bankruptcy is an easy option to get out of paying their debts.

Chapter 13 is a move to assist people with consolidating their debts, repaying them in affordable amounts fixed at regular intervals. This will teach people to be much more serious about their debts as they will soon realize that debts cannot just be written off but must also be repaid. They can, nevertheless, repay them in more reasonable amounts as far as they are concerned.

As a result of the changes, more protection now exists. In the past years, filing for bankruptcy implied protection from all creditors, in all cases. Now, there are some reservations to this 'automatic law'. These days, filing for bankruptcy does not automatically suggest being thrown out of your house if you have not finished paying your debt or have your license suspended or that you can't have divorce proceedings started your spouse. The new law will grant new power to creditors and is far more just.

The new law also prioritizes child support and alimony. The first amounts are therefore paid out in these fields rather than to creditors. In the past, creditors were given prioritized during the take-over of assets. Nowadays, family members come first. This is one way of being absolutely sure that family members are the first to get what they need.

People filing for bankruptcy must attend financial-management lectures as well. Attending these is obligatory. The debtors must attend seminars and workshops in order to better understand the basics of money management. A brand new start doesn't mean that their lack of financial management skills can however be ignored. They must try to learn these skills in order to avoid this from re-occuring. The government hopes to reduce the amount of people unnecessarily filing for bankruptcy.