Bankruptcy & Consumer Proposals

Declaring Bankruptcy in BC

While there are many options that can help you get relief from debt, Filing an Assignment in Bankruptcy may sometimes be necessary. Individuals who are unable to meet their debt obligations and do not have a reasonable expectation to do so in the near future can file for bankruptcy under the Bankruptcy and Insolvency Act (Canada). If you’re considering bankruptcy, a Licensed Insolvency Trustee can help assess your financial situation. Licensed Insolvency Trustees will also be a necessary part of handling any assets and will be responsible for the administration of bankruptcy until it is discharged.

A Licensed Insolvency Trustee can advise:

  • If you’re eligible to file for Bankruptcy
  • What the process for filing Bankruptcy entails
  • What responsibilities you’ll have to successfully discharge your bankruptcy
  • What happens to secured debts
  • What belongings you will be able to retain
  • How long your bankruptcy will remain on your credit rating
  • When your bankruptcy will be discharged

Do I have to pay for Insolvency Services?

Yes. A Licensed Insolvency Trustee will charge fees for their services. These are minimal and meant to cover the cost of items such as administrative matters, and document and tax preparation as well as client management. Typically, these fees can be paid over time rather than in one lump sum.

What is a Consumer Proposal?

Unlike Filing an Assignment in Bankruptcy, a Consumer Proposal allows you to retain assets, while negotiating a formal arrangement between yourself (the debtor) and all creditors, in order to settle any outstanding debt obligations. This is a court approved agreement where one’s creditors have accepted the offer of the debtor as a total satisfaction of debts.

Once the Consumer Proposal process has begun, creditors are no longer able to begin (or continue) any legal actions against you. Furthermore, once your creditors have agreed to proceed with Consumer Proposal, they’re unable to demand any additional payments.

Your credit score will not be as adversely impacted, compared with filing for personal bankruptcy. Some clients can apply for secured credit lines, or secured car loans, even during the active course of their Consumer Proposal term.

Any individual who is bankrupt or insolvent, and whose total debts (excluding a mortgage on the debtor’s principle residence) do not exceed $250,000 is eligible to make a Consumer Proposal. If your debts exceed $250k, you may still offer a Proposal to your creditors. Talk to us to find out of a Consumer Proposal is right for you.

What is Credit or Debt Counselling?

Credit counselling is a process that helps individual debtors with debt settlement using a variety of tools including education and budgeting. The goal is to reduce and ultimately eliminate debt. Our licensed professionals will conduct an assessment, the first stage in the insolvency process, which will provide for a financial appraisal interview and lay out the statutory and non-statutory options available to you. Please note that this again is not a legal alternative. All creditors must voluntarily agree to the DMP. Canada Revenue Agency does not participate in a DMP. Should a creditor not agree to the DMP, they can continue to proceed against you making it difficult to honour the DMP. We’ll discuss the merits and consequences of your options.

Credit Counsellors vs Other Debt Management Companies

Credit Counsellors can offer advice through budgeting tools, education and the use of Debt Management Plans (DMPs). Not for profit and for-profit credit counsellors who offer DMPs are licensed under the British Columbia Business Practices and Consumer Protection Act. The License gives them the ability to accept payment from you for distribution to more than one creditor.

Other debt management companies, however, are not licensed. They may advertise that they work for you or claim fast debt relief. In reality, they charge sizable up-front fees only to direct you to a Licensed Insolvency Trustee to file for a consumer proposal or bankruptcy. Note that in these instances, until the filling is done through the Licensed Insolvency Trustee, you are not protected from actions taken by your unsecured creditors. This means interest can continue to accumulate, collection calls will continue, and legal actions can commence.

Book a Free Consultation

We want to help you to get out of debt. Don’t hesitate to contact us if you would like to learn more about bankruptcy alternatives like debt consolidation or consumer proposals. Contact us today for more information.

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