by admin | Bankruptcy, Uncategorized
What is bankruptcy?
A: Bankruptcy is a legal process that may discharge you from most of your debts, subject to reasonable conditions.Once you declare bankruptcy, your unsecured creditors cannot take any further steps to recover the money you owe them.
Q: Who can declare bankruptcy?
A: Anyone who owes more than $1,000 and is unable to pay their debts in the normal course.
Q: How much does it cost to declare bankruptcy?
A: There are administrative fees, court costs, mailing costs and government fees your trustee will require you to pay. GTA Credit Solutions charges a small fee.
Q: Can I declare bankruptcy without a trustee?
A: GTA Credit will arrange the trustee.
Q: Will I lose all my assets?
A: There are a few exemptions: Household furnishings to a value of $11,300, personal effects to a value of $5,650, a personal vehicle to a value of $5,650, tools of the trade to a value of $11,300. Certain life insurance policies and RRSPs, and most pensions, are also exempt.
Q: What do I do to declare bankruptcy?
A: Call us. We will discuss with you the specifics of your unique case, including how much you owe and how much you own. (You are required to disclose all assets to your GTA consultant and trustee.) It’s important to keep us up to date on any changes to your address, phone number, employment and income. It’s a good idea to hand over to us all of your credit cards. You will also be required to attend two credit counselling sessions.
Q: What if some of my debts have a guarantor or co-signer?
A: If you declare bankruptcy, a guarantor, co-signer or supplementary credit card holder will likely be held responsible for the debt.
Q: What’s a counselling session?
A: The goal is to prevent you from getting into financial trouble again. A counsellor will help you understand why and how you got into trouble, help you budget, and teach you how to properly use credit in the future.
Q: What effect does bankruptcy have on my credit rating?
A: A first bankruptcy will give you a credit rating of R9, which is the worst rating, for as long as seven years or more after your bankruptcy is discharged.
Q: Can I keep my bank account?
A: You are allowed to have a bank account, but if you owe money to the bank where your account is, you may need to open one at a different bank.
Q: Can I keep my leased car?
A: As a secured debt, it is possible to keep a leased car, but remember that monthly expenses that are simply too high are probably the biggest part of your problem. Giving up the car will reduce your expenses – not only is there the lease payment to consider, but also insurance, gas, repairs and maintenance.
Q: Can my partner and I file a joint bankruptcy?
A: Yes, when two debtors are involved in a close financial relationship and their debts are substantially the same, it is possible to file jointly for bankruptcy. Your GTA Credit advisor and trustee will advise you if they believe a joint filing is in your best interest.
Q: What are the laws pertaining to bankruptcy?
A: The laws that govern bankruptcy are contained in the Bankruptcy and Insolvency Act (the Act), which the federal government established to help unfortunate but honest debtors recover from their financial problems and get a fresh start. The Act details the responsibilities and rights of all parties involved in solving debt problems: the Superintendent of Bankruptcy, the official receivers who represent the Superintendent of Bankruptcy, the court, licensed trustees – and you.
Q: Is bankruptcy my only option?
A: No! There are many options that can help you solve your money problems, including a consumer proposal. Come on in and we’ll talk you through all your options, and then we’ll help you decide which one is right for you.
Q: How does bankruptcy affect alimony or maintenance payments?
A: It doesn’t. Alimony and maintenance are provable claims that will be treated as preferred claims for any amount incurred the year before your bankruptcy. Alimony and maintenance payments must be kept up to date, and a bankruptcy will not stop any action for collection.
by admin | Bankruptcy, Consumer Proposal, Uncategorized
Q: Will filing a consumer proposal impact an immigration sponsorship?
A: You should check with Citizenship and Immigration Canada to get the most up to date information, but as of this writing, you can submit a consumer proposal and sponsor someone for immigration at the same time. You can’t, however, sponsor someone while you are an undischarged bankrupt. It’s important to note that when a consumer proposal is successful, any interest you’re paying is frozen, you may only have to repay a portion of your debts, garnishments on your wages cease, and your creditors are restricted from taking any legal action.
Q: How does a consumer proposal affect my credit report?
A: For the course of the proposal, up to five years, you will be rated “R9” or bad debt. Once the terms of the proposal are fulfilled, you will be rated “R7,” which reflects that you are repaying your debts by special arrangements, for three years.
Q: Who keeps track of my credit history?
A: In Canada, there are two credit bureaus, Equifax and TransUnion, who keep track of your credit. A consumer proposal will be reflected on your credit report for three years after it is completed.
Q: How does that affect my future?
A: A lower credit rating will affect your ability to get future credit, but the rating you get with a consumer proposal is not as bad as if you declare bankruptcy, and it doesn’t stay on your record as long. A bankruptcy will be on your credit report for seven years or more.
Q: I own a house and a car. Do I get to keep them?
A: Most of the time, secured creditors aren’t involved in a consumer proposal. You will likely continue to make your payments as usual.
Q: What happens when my mortgage comes up for renewal?
A: You’ll have to discuss the details with your lender, but usually if you keep your payments up to date and can prove that you will be able to continue to make your payments in the future, you will qualify for a renewal.
Q: Am I qualified to submit a consumer proposal?
A: You may be, if your debt doesn’t exceed $250,000 not including your mortgage (primary residence). Everyone’s case is different. GTA consultant can review your details and help you determine that.
Q: Can I go to jail for filing a consumer proposal?
A: As long as you file truthfully, there are no criminal charges associated with filing a consumer proposal.
Q: Can I pay my full debt through a consumer proposal?
A: At the end of the term of the proposal (up to five years), your debts are considered fully paid, even though most of the time the amount will be less than the actual debt you started with.
Q: I have to leave the country for my work. Can I do a consumer proposal first?
A: You should discuss your unique position with GTA consultant.
Q: How much does a consumer proposal cost?
A: It depends on a few factors, including your monthly budget and the value of your assets. Talk to GTA consultant about your specific situation.
Q: How long will a proposal last?
A: Up to five years.
Q: What happens if I can’t afford to finish my proposal?
A: If you miss three months of payment and do not file an amendment, your proposal is no longer a legally binding agreement and your creditors are free to take further collection action against you for the full amount of your debt. You may have to file for bankruptcy. Your trustee can advise you further.
Q: What happens if I forget a creditor on my proposal?
A: It depends on the amount of the debt. Your proposal may continue as offered if the debt is small, but a larger debt may mean an increase to your proposal payment.
by admin | Bankruptcy, Consumer Proposal, Uncategorized
How does making a late payment affect my score?
A: Badly! 35% of your credit score is based on your payment history. Credit bureaus don’t make available to the public their exact formula for calculating the points on your credit score, so it’s hard to say exactly how one late payment might affect you. Better to just be on time.
Q: So how does the rest of my credit score break down then?
A: Well, 35% comes from your payment history, 30% is your debt utilization ratio (sometimes also referred to as a credit to debt ratio), 15% is your credit history, 10% is new credit, and 10% is the types of credit you have in use.
Q: How do I get a credit score if I’m new to Canada?
A: If you have a short credit history – or none at all – you may not have a credit score. You need to have at least one active account within the last six months. The best thing you can do to start establishing credit is to apply for a secured credit card.
Q: How do I rebuild my credit after filing a proposal or for bankruptcy?
A: It will take some time, but you can do it. Your GTA consultant will help.
Q: Will filing for bankruptcy affect my spouse?
A: Not directly. But we do recommend that you come see us together to talk about both your options for solving your financial problems.
Q: Will my personal information be kept private?
A: In the case of credit counselling and informal arrangements, absolutely. For formal proceedings like a proposal or bankruptcy, the Office of the Superintendent of Bankruptcy keeps a record of your filing. A trustee is required to file
your income tax return for the year in which you declare Bankruptcy, so Canada Revenue Agency will also have a record of it. Your creditors will also receive notice once it has been filed with the Office of the Superintendent of Bankruptcy.
Q: How long does a proposal or bankruptcy stay on my credit record?
A: In Ontario, a consumer proposal stays on your record for three years after it’s completed; a first bankruptcy stays for up to seven years or more.
by admin | Bankruptcy, Consumer Proposal, Uncategorized
Q: What about my income tax debt?
A: Personal income tax debt is just like any other unsecured debt. Once you’ve filed for bankruptcy or submitted a consumer proposal, Canada Revenue Agency (CRA) can’t take any further action against you, including wage garnishment or freezing your assets. Your trustee will notify CRA once you file, and instruct it to stop any further action against you to collect your debt.
Q: I used to be able to meet my obligations, but my income has dropped. What can I do?
A: An income reduction because of a job change or job loss isn’t unusual. If you fall behind on your debt repayment and your creditors are threatening to put you into collections, you may want to consider filing a proposal, which would allow you to reduce your payments. If you don’t have enough income to consider a proposal, you may have to consider filing an assignment in bankruptcy.
Q: If I have to file, what assets will I lose? And what will I keep?
A: A consumer proposal doesn’t have any effect on your assets, unless you choose to liquidate them to fund the proposal. Check out our “What We Do” page for a list of those assets that are exempt under provincial law should you file for bankruptcy. In many cases, you can make arrangements to allow you to keep even those assets that might normally be sold. Q: What’s a credit score? A: A credit score is a number value assigned by credit bureaus to represent your credit record. It’s kind of a shorthand way of summing up how you’ve handled credit and debt repayment in the past.
Q: What happens to my credit score if I file a proposal or for bankruptcy?
A: Your credit score is affected whenever you don’t pay your bills on time, even if you haven’t filed a proposal or for bankruptcy. When a credit bureau is notified of a proposal, they will drop your score to “bad debt,” which is the same rating you would get if your debt went to a collections agency, until the proposal period is over, which can be up to five years. It’s called “R9.” After that, it becomes an “R7,” which means you are making regular payments through a special arrangement to settle your debts. After three years, the R7 is taken off your file. In bankruptcy, your credit score goes to R9 for the nine months it takes for your bankruptcy to be discharged (assuming it’s your first time), and stays that way for seven years or more afterwards.
Q: Will closing unused credit card accounts help my credit score?
A: Closing unused credit card accounts can actually hurt your score, either by making your credit history appear younger than it is, or by reducing the total credit available to you, which can affect your debt utilization ratio very badly. Your debt utilization ratio is the total amount of credit you have available (add up all the credit limits on your cards and lines of credit) compared to the total amount of debt (add up all your balances). As a general rule, you never want your debt utilization ratio to go higher than 20% (or a one to five ratio of balance carried to limit available). Closing an unused credit card account has a bad effect on your debt utilization ratio if you are carrying a lot of debt on your other cards.
by admin | Uncategorized
What are my options when dealing with my creditors? A: You can try to get a consolidation loan to pay off your creditors while lowering your monthly payment (and often your interest rate too). A bad credit history or the inability to meet the loan payments may mean this isn’t an option for you. In that case, the next step may be to try to negotiate a settlement or new payment terms with your creditors. This option is more successful when you have only a few creditors. It’s more difficult to get many creditors to agree to payment terms that are favourable to you. A more practical option may be to submit a consumer proposal with the help of a GTA Credit consultant. Our consultant will help determine how much you can afford to pay and what payment may be acceptable to your creditors. As a last resort, you may have to consider getting a trustee to help you file for personal bankruptcy.
Q: What’s the difference between personal bankruptcy and a consumer proposal?
A: Basically, with a consumer proposal you get to keep your assets and you will still pay off (at least a percentage of) your debts. The terms of the proposal may last as long as five years, at which time you will be legally released from your unsecured debts. In Ontario, a consumer proposal stays on your credit history for three years. In personal bankruptcy, you may be able to keep some of your assets; those that are not exempt under law will be sold and any proceeds distributed among your creditors. Once all the conditions of your bankruptcy have been met, you are then legally released from your unsecured debts. A first bankruptcy with no unique issues or surplus income takes nine months; it stays on your credit history for seven years or more. Each consumer proposal and bankruptcy is unique, so talk to your trustee about your particular situation.
Q: If I declare bankruptcy or submit a consumer proposal, do I get to keep my cell phone, internet service and things like that?
A: Yes, as long as you are current with your payments.
Q: Will declaring bankruptcy affect my ability to sponsor my family for immigration?
A: The sponsorship application does ask if you are bankrupt, since you are stating that you will be financially responsible for your family. Filing a consumer proposal is a better option in this case.
Q: If I am bankrupt or have filed a consumer proposal, can I still rent an apartment?
A: Yes. Q: Will declaring bankruptcy get rid of my student loans?
A: There is specific legislation that deals with student loans in a bankruptcy. Ask your GTA consultant about the particulars of your situation.
Q: How will filing bankruptcy or a consumer proposal affect my future employment?
A: Sometimes, a job application will ask if you have ever filed for bankruptcy. They don’t usually ask about consumer proposals. In some professions, bankruptcy can mean a restricted licence.
