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Get out of debt free card

February 5, 2018

Sadly, perhaps, there is no get out of debt free card. Getting out of debt can be relatively cheap with a bankruptcy costing little more than a thousand dollars but allowing a debtor to divest him/herself of potentially millions of dollars of debts. But there is always a monitoring throughout the process and certain duties and responsibilities that fall on the bankrupt.

For instance, bankrupts must stay in touch with their trustee(s), they must report their income and must attend at counselling sessions. The sessions are intended to assist with budgeting advice, credit management and avoidance techniques and identifying non-budgetary problem areas for the individual.

But my friend didn’t have to pay:

Licensed Insolvency Trustees often hear comparisons of the debtor’s situation with that of their friends. A couple of common comparisons are; “my friend never had to pay surplus income but we both make the same amount of money” or “my friend was able to keep his house and didn’t have to pay anything when he went bankrupt”.

The answer to the first scenario is that the income may be the same but the expense allowances may be vastly different, the friend may have had allowances for support or medical payments. In the second instance the trustee must determine whether there is any equity on the property and if so payments may be required to settle for that value. Some properties are over-leveraged and would yield no funds for the estate.

If it sounds to good to be true, it probably is…