- Avoid bankruptcy and protect assets
- Prevent creditors from taking further legal or collection action against you
- Stop wage garnishments, interest and penalties
- Bankruptcy and Insolvency Act forces creditors to participate
- Ability to compromise debts
- Flexible payment terms
- Allows you to protect assets that would be affected by filing personal bankruptcy
- Anyone whose total debts, excluding the mortgage on the principal residence, are less than $250,000. For larger debts a Division I Proposal is filed.
- Two people can file a joint consumer proposal provided that they have a financial relationship and the majority of their debts are joint
- Individuals that owe over $250,000 can file a Division I Proposal
- Bankruptcy legislation in Canada is designed to help an honest, but unfortunate debtor, get a fresh start
- Bankruptcy legislation is not designed to make it impossible for you to live or to rebuild your credit rating
- Filing personal bankruptcy ends your legal obligation to pay your unsecured creditors and gives you a way to be discharged from your debts
- Immediately stops all creditor collection action including wage garnishments
- Provided you make the required payments, filing personal bankruptcy doesn't affect secured creditors (mortgages & car loans)
- If you have surplus income you will have to pay a portion of your surplus to your creditors
- Many assets, but not all, are exempt from seizure by creditors
No. A goal of the bankruptcy legislation is that individuals filing personal bankruptcy get a fresh start. Therefore, certain assets are deemed exempt from seizure by creditors.
If you owe money to your creditors and do not make payments your creditors may take legal action against you. The result of this legal action is something called a judgement. A judgment is a court order that allows your creditors to deduct payments directly from your wages and to seize assets.
Your credit rating is like a report card. Having money problems, filing personal bankruptcy or making a consumer proposal will result in a bad mark on your credit report card. Therefore to rebuild your credit rating you have to get as many good marks as possible. The only way to get a good mark is to borrow money and pay it back within the time restrictions. The way to get a bank or credit card company to lend you money despite your poor credit rating is to:
- Have a co-signer
- Obtain a secure credit card
Debt Consolidation Loans are a popular debt management option for people who are experiencing money problems.
Using a consolidation loan to manage your personal debts will:
- Consolidate your personal debts into one monthly payment
- Reduce interest charges
- Will not damage your credit rating
- More assets than personal debts (not insolvent)
- High income and can afford to pay all debts including interest
- Own assets that can be used as collateral for loan
- An excellent credit rating
A debt management plan is an informal arrangement negotiated between yourself and your creditors by a credit counsellor.
Credit counsellors CAN help you by:
- Providing budgeting and money management advice
- Filing a debt management plan
- Helping you communicate with your creditors
Credit counsellors CANNOT help you to:
- Filing a consumer proposal
- Deal with government debts
- Compromise the total amount that you owe
- Stop, by legislation, creditors from garnisheeing your wages