When you are struggling with debt, it can feel like you are stuck in a nightmare. You may not know where to turn for help. And when you finally find the courage to reach out for assistance, you may be worried that your creditors will try to stop you from filing a Consumer Proposal or Personal Bankruptcy. This is a completely normal concern that many people have before filing.
In this article, we will answer the question: can creditors stop me from filing a Consumer Proposal or Personal Bankruptcy?
What is a Consumer Proposal or Personal Bankruptcy
When an individual is unable to repay their debts, they have the option of filing for bankruptcy or a consumer proposal. They are both legal processes that allow the debtor to have their unsecured debts settled by the process. You can learn more about which debts are released in a consumer proposal or bankruptcy.
A consumer proposal is a type of debt relief that allows a debtor to make payments over a period of time to settle their debts. This can be an attractive option for those who are able to make regular payments but are struggling with the amount of debt they owe.
Personal bankruptcy, on the other hand, allows a debtor to have their unsecured debts settled without agreement by their creditors. However, this option comes with some serious consequences, including the potential loss of assets and a more serious note on a debtor’s credit report. As a result, it is important to speak with a Licensed Insolvency Trustee (LIT) before making the decision to file for bankruptcy.
Can creditors stop me from filing a Consumer Proposal or Personal Bankruptcy?
No, your creditors cannot stop you from filing a Consumer Proposal or Personal Bankruptcy. However, they can object to your proposal or bankruptcy if they feel that it is not in their best interest or if they believe you have done something in contradiction with the BIA.
If your creditors do object to your proposal or bankruptcy, you may need to appear before a court. In most cases, however, creditors will not object to a Consumer Proposal or Personal Bankruptcy if they believe that it is the best way for you to repay your debts.
It is quite uncommon for creditors to object to a consumer proposal or bankruptcy. When there is an objection, it is usually for a reason that is known ahead of filing. An LIT must perform an assessment of your situation prior to your filing. During this assessment, if it is uncovered that there are any potential issues that may cause an objection by creditors, they will let you know.
How do I know if my situation qualifies for one of these options
The best way to know if your situation qualifies for a Consumer Proposal or Personal Bankruptcy is to speak with a Licensed Insolvency Trustee. They will be able to assess your financial situation and provide you with the best options for debt relief.
The rule of thumb, however, is that if you are struggling to pay your debt and your debts exceed the value of any equity you have in your assets you will most likely find a solution with either a consumer proposal or bankruptcy.
You can also check our our article on 10 ways to pay off debt faster.
If you decide to file, what should you expect?
If you decide to file a Consumer Proposal or Personal Bankruptcy, you can expect the following:
- Your creditors will be notified of your decision and they will no longer be able to contact you directly for collection purposes.
- You may be required to give up, or buy back from the Trustee, some of your assets, depending on which option you choose.
- Your credit score will be impacted.
- You will be required to make affordable payments to your creditors, either through a consumer proposal or as part of your bankruptcy.
- You will be required to attend credit counseling sessions.
You should also check out our other article that answers ‘is a consumer proposal worth it?‘.
While creditors cannot stop you from filing a Consumer Proposal or Personal Bankruptcy, it is critically important (and required) to speak with a Licensed Insolvency Trustee before making your decision. They will be able to assess your financial situation and provide you with the best options for debt relief. Filing for a Consumer Proposal or Personal Bankruptcy is a big decision that should not be taken lightly. But if you are struggling with debt, it may be the best option for you.
This article was written by Angela Rodgers, CIRP, LIT. She is a Licensed Insolvency Trustee and the President of Powell Associates Ltd. She has worked in the insolvency industry for over 20 years. No matter if you are looking at filing bankruptcy, a consumer proposal, or simply looking for debt management advice, Angela can help.