Under the Bankruptcy and Insolvency Act, you may make a proposal or compromise to your creditors. This usually is a cents on the dollar compromise. Your offer maybe to compromise the total amount you owe your creditors or extend the time you have to pay your debts in full. Instead of monthly payments to your creditors, you could also offer to cash in certain assets to pay a portion or all of the debts. A Trustee in Bankruptcy will assist you in making a fair offer to your creditors. The filing of the proposal stops unwanted calls from creditors, stops your wages from being garnished, and allows you time to make arrangements to pay your creditors what you can afford.
In order to qualify for a consumer proposal you must owe less than $75,000 not counting mortgages registered against your principal residence.
Monday, April 30, 2007
Alternatives to Bankruptcy
A number of alternatives to bankruptcy exist for individuals who are facing financial difficulty. Listed below are various options which may be of assistance.
Contact Your Creditors
Explain to your creditors how your circumstances have changed and explain why you cannot make your agreed upon payments. Suggest an arrangement that could work for both of you. Creditors are generally prepared to work with you.
Debt Consolidation Loan
You can approach a bank or financial institution about combining or "consolidating" your debts into one loan. The financial institution pays off all your debts and you only make a monthly payment to that creditor. Quite often, the financial institution will ask for a co-signor.
Informal Proposal
In some cases our firm of insolvency consultants and bankruptcy trustees can work with you and your creditors to set up a payment plan that will allow you to pay your creditors in an orderly way and thus help preserve your credit rating. This operates similar to a debt consolidation loan except you do not borrow the money to pay off your creditors.
Debt Counsellors
There are a number of debt counsellors who will make arrangements with your creditors to pay off your indebtness in full. The counsellor will review your financial situation and arrange for a payment program to be made between you and your creditors. A fee may be charged by the counsellor in order to perform this service.
Contact Your Creditors
Explain to your creditors how your circumstances have changed and explain why you cannot make your agreed upon payments. Suggest an arrangement that could work for both of you. Creditors are generally prepared to work with you.
Debt Consolidation Loan
You can approach a bank or financial institution about combining or "consolidating" your debts into one loan. The financial institution pays off all your debts and you only make a monthly payment to that creditor. Quite often, the financial institution will ask for a co-signor.
Informal Proposal
In some cases our firm of insolvency consultants and bankruptcy trustees can work with you and your creditors to set up a payment plan that will allow you to pay your creditors in an orderly way and thus help preserve your credit rating. This operates similar to a debt consolidation loan except you do not borrow the money to pay off your creditors.
Debt Counsellors
There are a number of debt counsellors who will make arrangements with your creditors to pay off your indebtness in full. The counsellor will review your financial situation and arrange for a payment program to be made between you and your creditors. A fee may be charged by the counsellor in order to perform this service.
What is Personal Bankruptcy?
Under the Bankruptcy and Insolvency Act, a reasonable and honest individual is given the chance to be released of his/her debts by declaring bankruptcy. At the end of nine months, if you perform certain duties required of you by law, your debts will be discharged or wiped out subject to certain exceptions. It is intended to allow you to make a fresh start.
The bankruptcy gives you protection against phone calls from your creditors; wages will no longer be garnished; and your utilities will not be cut off. Generally, you are allowed to keep basic furniture and your personal effects when you go bankrupt, and under certain circumstances you may even be allowed to keep your car; your house/trailer, RRSPs and life insurance policy. Some debts such as student loans, fines and fraud will not be discharged.
The bankruptcy gives you protection against phone calls from your creditors; wages will no longer be garnished; and your utilities will not be cut off. Generally, you are allowed to keep basic furniture and your personal effects when you go bankrupt, and under certain circumstances you may even be allowed to keep your car; your house/trailer, RRSPs and life insurance policy. Some debts such as student loans, fines and fraud will not be discharged.
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