Personal Bankruptcy: Pros & Cons

Eliminate overwhelming debt, stop collection calls, and get a fresh start — with full legal protection and expert support.

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What Are the Advantages of Filing Bankruptcy?

Filing for personal bankruptcy in Canada offers a powerful solution when you’re struggling with unmanageable debt.

It’s a legal process that can eliminate most unsecured debts and give you a clean financial slate. Bankruptcy protects you from creditors and gives you space to breathe — without fear of wage garnishment or legal action.

While it’s not the right solution for everyone, understanding the advantages and disadvantages of bankruptcy can help you make an informed decision with confidence and clarity.

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How Personal Bankruptcy Can Protect You

Bankruptcy provides immediate relief.

Once filed, collection efforts stop, legal actions are halted, and wage garnishments are lifted. You’re legally protected under Canada’s Bankruptcy and Insolvency Act. You’ll work with a Licensed Insolvency Trustee who ensures everything is handled with respect, empathy, and care — helping you get back on solid ground, without the pressure of interest or mounting debt. But it’s not the only way.

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Disadvantages

Understand the Disadvantages of Declaring Bankruptcy

While bankruptcy can be a powerful solution for overwhelming debt, it’s important to understand the full picture. Here are the key disadvantages of filing for bankruptcy in Canada:

Impact on Credit

Bankruptcy will remain on your credit report for 6 to 7 years (or longer for repeat filings), which can make accessing new credit more difficult in the short term.

Loss of Non-Exempt Assets

Some assets may need to be surrendered, including investments, property with high equity, or luxury items — though exemptions vary by province.

Public Record

Bankruptcy is a matter of public record, and in some cases, your name may appear in government databases.

Potential Career Impacts

Some professional licenses or financial roles may be affected by a bankruptcy filing, depending on the industry.

Surplus Income Requirements

If your income exceeds a certain threshold, you may be required to make extra payments, which can extend the length and cost of the process.

Not All Debts Are Discharged

Certain debts — like student loans under 7 years old, child support, and fines — are not cleared through bankruptcy.

Emotional Stress

Declaring bankruptcy can feel overwhelming or discouraging, especially without the right support — which is why we’re here to walk you through it, every step of the way.

Bankruptcy is a serious decision — but you don’t have to make it alone.

Book a free consultation with Spergel today, and we’ll help you understand all your options and whether bankruptcy is the right fit for your situation.

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Considerations

What to Consider When Filing for Personal Bankruptcy

Filing for personal bankruptcy can offer a fresh financial start, but it’s not a decision to take lightly. It’s important to fully understand how it works and whether it’s the right fit for your unique situation.

Bankruptcy can eliminate many types of unsecured debt and stop creditor action, but it may also require you to give up certain assets or make additional payments based on your income. It will also impact your credit for several years, which can affect your ability to borrow in the short term.

Before making any decisions, it’s wise to speak with a Licensed Insolvency Trustee. They’ll help you understand all your options and guide you through the process.

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How Do I Get Started?

It all starts with a conversation.

Licensed Insolvency Trustees (LITs) are the only professionals in Canada legally authorized to file for personal bankruptcy. At Spergel, we make it simple, supportive, and judgment-free. Here’s what we offer:

Free consultations — no pressure, no commitment
A clear explanation of your options
A customized plan based on your needs
Ongoing support from your dedicated LIT — not a call centre

Everyone’s Situation is Different. Let’s Talk About You.

Book a free consultation with Spergel. We’ll walk through your situation and build a plan that gives you the relief you deserve.

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Real Canadians. Real Success — Like David

“Spergel has been a true lifesaver for me. Facing overwhelming debts and a very challenging time in my life in general, they expertly navigated me through the bankruptcy process with compassion and efficiency. Their hands-on approach made the process seamless. Now, I’m on the road to financial recovery, free from the burdens of the past. Thank you, Spergel, for providing the support I needed for a fresh start.”

– David, Ontario

Read David’s Story

David’s Story is just one of many

David’s story is just one example of how bankruptcy, when guided by the right support, can offer real hope and lasting relief. Whether you’re dealing with personal loans, tax debt, or creditor pressure, bankruptcy can be a lifeline. Explore more Success Stories from Canadians we’ve helped — or reach out so we can help you, too.

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