by admin | Bankruptcy, Uncategorized
Q: What are the advantages of declaring personal bankruptcy?
A: Your unsecured creditors must stop any collection actions against you, including legal actions, and any garnishment on your wages or bank account stop. You are released from unsecured debt and free to make a new start.
Q: Can I go to jail for declaring bankruptcy?
A: Honest but unfortunate debtors who file truthfully don’t go to jail. There are no criminal charges associated with filing for personal bankruptcy.
Q: Will people find out about my bankruptcy?
A: It will be on public record, and all your creditors (secured and unsecured) will be notified. Your employer will only be notified if the trustee is required to stop your wages from being garnisheed.
Q: Will I lose my house?
A: It depends on the amount of equity you have in the property. You may be able to pay the value of the equity to your trustee to be distributed to your creditors. As long as you are able to keep current with your mortgage payments, you may be able to keep your home. Talk to GTA Credit advisor or your mortgage lender about your unique case.
Q: Will I have to sell my assets?
A: Not necessarily. GTA consultant will advise you about which assets may need to be sold or distributed. If you have assets in which there is no equity (if you owe more on a secured loan for an item, a car for
example, than the item is worth) and your trustee agrees, you may be able to negotiate with the lender to keep the asset.
Q: Does declaring personal bankruptcy cover all my debts?
A: No. Personal bankruptcy covers only unsecured debts, and some unsecured debts aren’t covered, such as child support, alimony, court fines and penalties, or debts that are found to be fraudulent. Student loans may be covered if you stopped being a student more than seven years ago, and can meet some other requirements. Secured debts such as mortgages are car loans are not covered by bankruptcy unless you relinquish ownership of these assets. Always discuss your unique situation with GTA Credit consultant.
Q: What happens if my bankruptcy doesn’t get discharged?
A: Once the trustee has completed the administration of your case and been discharged, if your bankruptcy isn’t discharged, you will remain responsible for your debts and your creditors can resume their collection actions.
Q: Why wouldn’t my bankruptcy be discharged?
A: Your trustee or your creditors can prevent your bankruptcy from being discharged if you don’t perform your obligations during the nine months after you declare, such as not showing up for credit counselling sessions or not provideng monthly income & expense report or failing to make the required monthly payments to your trustee.
Q: I have to leave the country for work. Can I declare bankruptcy first?
A: Talk to GTA consultant about your unique situation.
Q: How long does bankruptcy take?
A: From filing to discharge, a normal first bankruptcy takes nine months or more (if you have surplus). There are some factors that will affect that, such as if this isn’t your first bankruptcy, you have surplus income, your creditors dispute your bankruptcy or you fail to meet your obligations. Talk to your trustee about your unique case.
Q: What happens if a creditor I forgot to include in the bankruptcy contacts me after I’m discharged?
A: In most cases, as long as the debt was incurred before you filed for bankruptcy and is a provable debt, your trustee will send notice to the creditor and it will be cleared. Talk to your trustee..
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 | Bankruptcy, Consumer Proposal, Uncategorized
Q: I read on one of your other pages where you talk about “secured” and “unsecured” debts. What’s the difference? A: “Secured” debt is backed up by some kind of collateral, which reduces the risk for your lender. Your mortgage, for instance, is a secured debt because the value of the house itself means the lender’s risk is minimized. To oversimplify things a bit, if you fail to pay the loan, the lender takes the house, and they lose nothing. A credit card is an example of “unsecured” debt. There is no “lien” on your property; that is, the lender has no right to take your property if you don’t meet your repayment obligations. Secured debt usually carries a lower interest rate because of the lesser risk for the lender.
Q: Harassment from my creditors is ruining my life! How do I make them stop? A: When you file for bankruptcy or submit a consumer proposal, your creditors are prohibited from contacting you.
Q: My wages have been garnisheed! What can I do about it? A: When you file for bankruptcy or submit a consumer proposal, any further garnishment stops too. It’s part of the “stay of proceedings.
Q: My credit is pretty bad. Can I still get a bank loan? A: If you already know your credit is bad, you shouldn’t even apply. Just applying can make your credit score even worse. Let us help you fix your credit first.
Q: If I come to see you, what are you going to be looking at? A: We’ll look at your assets and liabilities, and figure out your net worth, even if it’s negative. In other words, we’ll take what you own and subtract what you owe. We’ll take what’s coming in and subtract what’s going out. And that way we’ll have a clear picture of your situation. We’ll check out your credit report, too. Then we’ll get you set up with a monthly budget to get you started on the right track. Remember, a trustee represents your creditors, but we work for you!
