Posts tagged debt settlement
How to Avoid Bankruptcy

You can’t go bankrupt if you have no debt.  Bankruptcy is a relief valve for debtors who find themselves unable to cope with overwhelming debts.  Bankruptcy is not the only option for resolving debts but the availability of other options is dependent upon individual circumstances.  The sooner you identify and seek to address significant debt, the more options will be available to you.

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Advantages of Filing a Consumer Proposal vs. a Bankruptcy

A consumer proposal can be creative and involve the sale, over time, of assets and payment of all or a portion of the equity in those assets to your creditors. This would allow you to settle your debts through a lump-sum payment instead of having to make monthly payments.

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What Happens if I Default on My Consumer Proposal

If a debtor is 3 months in arrears of monthly consumer proposal payments the consumer proposal is deemed annulled, which means that creditors can resume collection actions. There is no automatic bankruptcy if a debtor defaults on a consumer proposal.

that fails to make more than 2 payments cumulative during the Proposal will have their Proposal annulled and creditors can resume collecting their balances plus interest less any payments made. While a default on a Consumer Proposal will not automatically result in a Bankruptcy, however, the debtor cannot file another Proposal.

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Dealing With Debt - Understanding the Two Types of Proposals

Division 1 Proposal Is when a consumer debtor owes more than $250,000 in debts, excluding the mortgage on their principal residence. If creditors don’t accept this proposal there is a deemed personal bankruptcy.

A consumer proposal is when a consumer debtor owes less than $250,000 in debts, excluding the mortgage on their principal residence. There is no deemed personal bankruptcy if the creditors reject the consumer proposal.

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Consumer Proposal vs. Credit Counselling?

With all of the choices facing financially distressed consumers, it’s important to compare your options. The following chart provides you with information to help you choose the debt repayment solution that best meets the needs of you and your family.  

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How Are Secured Debts Treated In Personal Bankruptcy or a Consumer Proposal?

When an individual files personal bankruptcy or a consumer proposal these loans are not always impacted and the assets can usually be kept as long as the loan payments are current and continue to be made in accordance with the credit agreement.

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Using RRSPs to Pay Down Debt

If you are unable to keep up with your debt payments you should consult a Licensed Insolvency Trustee to discuss your options before cashing-in any of your investments.   Your investment savings may be exempt from seizure so you may be able to keep them if you file for personal bankruptcy or settle your debts through a consumer proposal.

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Will My Separation Agreement Protect Me If My Ex Goes Bankrupt?

When a relationship ends it is not uncommon to have a formal separation agreement drawn up by a lawyer to spell out the responsibilities of each party.  Even though both parties may have agreed to assume responsibility for certain debts, it does not absolve the parties should one of them default on credit that was granted jointly such as joint credit cards or lines of credit.  

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Financial Literacy - Understanding Collateral Mortgages

The mortgage process is changing and many banks have are now using collateral mortgages when you purchase or refinance your home.  A collateral mortgage typically designed to secure all obligations that you owe to the bank and there is no dollar limit on the mortgage.

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Do I Qualify For Bankruptcy?

Basically, if you owe at least $1,000, are unable to keep up with your monthly debt payments and do not have assets such as vehicles, house, or investments that you can sell to pay your debts in full, then you can choose to file personal bankruptcy.  It is your choice whether or not to voluntarily put yourself into bankruptcy and no one can stop you.

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Beware of Debt Settlement Offers

The debt settlement and credit counselling companies would have you believe that they can easily have your credit balances reduced and save you hundreds if not thousands of dollars.   The problem is they cannot guarantee any results.  They will require that you pay them monthly administration fees and/or a percentage of the settlement amount as payment for their services.  But you need to read their documents very closely to find out what happens to all of those fees that you have paid if they are unable to reach agreements with some or all of your creditors.

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Financial Warning Signs

Most of us can sense impending financial trouble but we tend to shy away from seeking professional help out of embarrassment or fear of being judged.   Licenced Insolvency Trustees and debt counsellors are there to help and should be able to provide you with financial counselling in a non-judgmental and professional manner.   The information they provide should help you better understand your financial situation and the options and resources that are in place to assist you.  This will allow you to make the best possible decision to resolve your financial concerns.

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