Canadian law offers two solutions; Bankruptcy and a Consumer Proposal.

Each offers a resolution to the problem and must be analyzed to determine what is best for each person. A consumer proposal allows a debtor to reduce his or her claims, stop ongoing interest on unsecured creditors, prevent lawsuits and the debtor does not fall into formal bankruptcy. The settlements can be paid to a maximum five year period. Many people do not see bankruptcy as a solution. These include people who are not comfortable going bankrupt. Consumers’ proposals are also a consideration to individuals who have equity in their home or Vehicle which are fully paid. Individuals who may wish to sponsor an incoming family member or who need to be bonded also can consider proposals.

 

Many debtors decide that bankruptcy is their best choice. In such a case, debtors are relieved from almost all their debts. Basically, only fines, alimony, child support and debts that were fraudulently incurred survive a bankruptcy discharge. The Bankruptcy office of the government establishes income guidelines. Those earning below the guideline will be discharged in as little as nine months for a first bankruptcy and 24 for a second filing. These figures are 21 and 36 months for those earning in excess of the guidelines. Special rules are in effect for those filing more than their second bankruptcy or who owe over $200,000 in income tax arrears. Until discharge, the individual must make a monthly payment to the trustee based on that person’s earnings. The fees of the trustee are included in the monthly payments.

 

Once discharged a debtor is free to do as he or she wishes. The debtor must then also work to re-establish a credit rating which will allow for a more normal pattern to make larger acquisitions.

 

Each case is different and debtors should not look to their neighbor’s for patterns. Typically, the first meeting with insolvency professionals is without charge so debtors can be properly informed of their rights and recourses.

 

We strongly urge people in difficult financial conditions to get the proper advice and act accordingly. Insolvency professionals are charged to be lifeguards so debtors do not drown.