Question about bankruptcy

[Big D]

Can someone explain something to me?
I'm not well educated on the subject and i'm curious.

here's the story:


I have a friend and her parents declared bankruptcy

lets jump back a few months before.
they just recently bought a new truck renovated the entire house, and maxed out all the cc because they knew they had to file for bankruptcy.

so now they declared bankruptcy and have to hardly pay anything back i think only 700$ for 21 months, and they get to keep everything.
this doesn't seem right, there was no consequences.

meanwhile I'm thinking why am i paying my bills like a sucker ?

what do you guys think of this ? I don't think its fair at all.

[PdH]

Each province has different exemptions, which basically means you can keep things up to a certain value. However, it doesn't necessarily mean you can keep everything you have/own. For example the exemptions for Ontario are:

Clothing $5,600.00
Household Goods $11,300.00
Tools of the Trade $11,300.00
Farmers $28,300.00
Motor Vehicle $5,650.00

In B.C. they are:

Equity in Household items = $ 4,000;
Equity in a Vehicle = $ 5,000; The vehicle exemption drops to $2,000 if the debtor is behind on child care payments (to facilitate the enforcement of Maintenance Orders)
Equity in work tools = $ 10,000;

Keeping your home gets a little more complex and is subject to objections from creditors.

I guess the major consequence is that you won't get any credit for 7 years at which time it's purged from your credit report, but then you have to re-establish everything. It's not really the get out of jail free card like it seems at first glance.

[beretta96]

I had gone bankrupt when I was in my early twenties. I took out a large enough loan, and put it all on BRE-X. Along with an employer who wasn't deducting enough tax...etc...etc...

I had a sweet Montecarlo car in mint shape and really loved that car. It was the only thing I could keep at a reduced interest rate as well. All other debt which is not secure was wiped clean.

My cost at the time was $1200 to the agency and carry on with the car loan. It's not worth it in the long run. They claim 7 years to get a credit back, but it is more like ten. The first 7 years you start by paying cash for items, then you have to use high interest banks for loans like well fargo. If you're sincere about turning it around, you have no choice at paying 21% to 29% interest.

When it was time to buy a home, even after the magic 7 years, we needed two co-signers and they stayed on for two terms, which screws up their credit if they need some for whatever life throws their way.

Financially, you do pay back what you owed in high interest loans over the 7 years, and anything major you have to have a really great family or you're screwed. Not to mention you jeopardize their credit if you're not responsible.

It's not worth it in my opinion. Ten years is a long road and everyone always raises an eyebrow when you ask to borrow. You have to ask yourself, if I smarten up now, will I be debt free in ten years? If the answer is yes, you still have excellent credit come then and a valuable experience.

Just my opinion of course.

[Big D]

thanks for clearing things up for me guys.

I guess i'm just jealous that they go on trips 3-4 times a year and buy everything they want. not being careful with their expenses and now they go bankrupt with hardly no consequences. they seriously didn't lose anything, that's what surprises me

it just seems like such an easy way out.

anyways enough with my bitching.