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Frequently Asked QuestionsFinding Debt Relief

One of the biggest challenges to finding debt relief is figuring out where to start. Unfortunately, many in our society have been taught to not speak about money and especially not about problems with money and debt. This situation gets even worse since some creditors and collection agencies purposely spread false information to discourage people from finding the debt relief options that work for them.

The good news is that there are options available and ways to find out more information on these options.

How Can I Find Information on Debt Relief Options?

If you are struggling with debt and unable to pay your debts as they become due, you may be wondering what you can do. One excellent way to find out information on debt relief is to meet with a licensed trustee in bankruptcy. Many people believe that, because of the name, a trustee can only help you file for bankruptcy. This isn’t true.

Bankruptcy trustees study for many years and are licensed and registered by the federal government. While they are able to administer bankruptcy and proposal processes, a trustee can also review your financial situation and provide you with details on the debt relief options that are available to you. You can then use this information to make an informed decision about your financial future.

What is Bankruptcy?

Bankruptcy is a legal process that is designed to give a fresh start to those who are unable to pay their debts. When you file for bankruptcy, the end result is that most (if not all) of your debts are eliminated. This puts you in a position where rebuilding your financial life is possible.

Do I Lose Everything when I File for Bankruptcy?

No. This is a common myth. The goal of the bankruptcy is not to punish those who file and leave them with nothing. It is to provide a fresh start. For this reason, you are able to keep items that are considered necessary to live a basic lifestyle. These items are called “exempt assets.” Each province maintains a list of exempt assets and the value of these assets. Your bankruptcy trustee will ensure that you are able to keep all exempt assets. If you earn over a certain amount ( as defined by the government) you may be required to forego some of these earnings to your creditors in exchange for eliminating your debts.

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What Debts can be Included in a Bankruptcy?

Only unsecured debts can be included in a bankruptcy. This includes debts such as credit card debt, personal loans, unsecured lines of credit, bank overdraft fees and many other similar debts. Student loan debts can be included only if you have been out of school for at least seven years. Bankruptcy does not eliminate debts such as automobile loans and mortgages. It also does not eliminate court ordered debts such as spousal support or child support payments.

What is a Consumer Proposal?

A consumer proposal is a legal process where you offer to repay your creditors on terms that you can afford. Most proposals see you repay a portion of your debt in monthly payments over a set period of time. The remaining outstanding debt is eliminated once the proposal is complete.

Why Would Creditors Accept a Consumer Proposal?

Creditors understand that, if you are in a position where a consumer proposal makes sense to you, that you are having difficulty repaying your debt and will likely need to file for bankruptcy if the proposal is not accepted. Creditors almost always receive much less in a bankruptcy than they would in a proposal. Therefore, creditors would rather get something with a proposal than the nothing or close to nothing that they would receive in a bankruptcy situation.

What Debts can be Included in a Consumer Proposal?

Much like a bankruptcy, you can only include unsecured debts in a consumer proposal. If you are having difficulty repaying mortgage debt, automobile loan debt or other secured debt, you will need to speak with these creditors individually.

Do I Lose Assets in a Consumer Proposal?

No. Generally the consumer proposal process does not involve losing any assets. As long as you continue to make payments on your home, car, etc. you should be able to keep these assets.  If you own these assets outright and they have meaningful value, this will be taken into account when you develop your offer of what you can afford to pay your creditors.

As you can see, there are a number of different debt relief options available to those who need them. By meeting with a licensed trustee in bankruptcy, you can find more information on the options that are available to you. Most trustees offer the initial consultation for free. This allows you to find out the information you need that will help you make an informed decision for your financial future.