Personal bankruptcies (commercial bankruptcies are different) as understood by me after I filed a personal bankruptcy in 2007 in Ottawa Ontario Canada. Updated on January 10 of 2025:

Purpose of personal bankruptcy (commercial bankruptcy is different than the personal bankruptcy) is to get protection from creditors when it becomes impossible to pay credit cards debit. The only acceptable reason for some one not to pay debt is when there was a financial crisis situation such as unemployment, no income etc. Common sense is to liquidate some assets and pay off the debt, if some one was unemployed but had substantial assets. If there were no assets to liquidate to pay for the debt and no monthly income than personal bankruptcy is one of the solutions. Companies specializing in bankruptcy file the paper work in which assets and debt are both declared to show some ones inability to pay the debt. If some one had enough assets, company might ask them to liquidate the assets and pay for the debt. So the bankruptcy is not just to get rid of the debt, rather also to declare the assets to show the inability to pay the debt. In such situations some creditors or collection agencies offer to reduce the debt amount and make offers such as ten cents to a dollars etc. to close the file. So disclosing/declaring assets is an important and integral part of filing a bankruptcy. Hiding assets and filing bankruptcy to get rid of the debt is crookery and must be a crime. When my bankruptcy was filed in 2007 for a small amount of personal debt of credit cards, I was already on OW social assistance, which did not result in any income garnish to pay towards debt. If someone was employed with income, percentage of income is deducted (garnished) to pay for the debts but not the entire income. That is part of the protection under bankruptcy, otherwise creditors tend to create problems and unnecessary harassment through collection agencies.

(PS: probably only wheel of fortune or monopoly board game have bankruptcy without assets declaration.).

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Engr. {(male) KhalidMahmood}

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