by admin | Consumer Proposal, Credit Counseling, Credit Repair, Uncategorized
Dealing with debt can be a nerve-wracking situation for most people. When we find ourselves face to face with our debts we assume that bankruptcy may be the only option we have which could possibly save us. However, if you are a resident of Canada you just may be in luck because you have an alternative to bankruptcy: A Consumer Proposal.
Despite the Consumer Proposal being one effective solution of reducing debts, most Canadians have never heard of the term. What is it? How does it work? And why it is better than bankruptcy, are just a few of the questions that may be going in your head.
Consumer Proposal vs. Bankruptcy:
We say that a Consumer Proposal is a far more powerful solution to settling your debts than bankruptcy and we say this with good reason. By filing for a Consumer Proposal you can take the debt which for some reasons you cannot pay at the moment, reduce the debt by two thirds or possibly even more than that, stop all the interest that may be charged on the money you owe and get five years time to pay back the owed amount.
During these five years you are safe in the sense that nobody can take you to court or sue you for not being able to pay your debt. The five year period that you are allotted takes off some of the pressure as it is a good amount of time in which you can arrange for money to pay back.
It is better than bankruptcy also because you would not be required to surrender any assets while agreeing to a Consumer Proposal. If you are still not convinced, here’s another reason why Consumer Proposals are a way better option to handle your debt than bankruptcy: when you opt for a Consumer Proposal you get an R7 credit ranking which is basically indicating that an agreement has been made between you and your creditors about how the debt would be settled. This R7 rating remains on your report for three years only. On the other hand when you file for bankruptcy, an R9 credit rating is assigned to your credit report which is the worst rating anybody could have and to make matters worse it remains on your credit report for about seven to fourteen years.
While we now understand why Consumer Proposal may be a good option for an individual in debt, but what is in it for the creditors? When a person in debt files for bankruptcy, the creditor gets nothing out of it whereas when he files for a Consumer Proposal the creditor gets something out of it. For example, you owe 20,000 dollars and you file for a Consumer Proposal which reduces the amount by some percent, consequently you have to pay back some amount of money, let’s say 200 to 300 dollars per month to the creditors, whereas in bankruptcy you just straight up cannot pay anything at all at the moment. This is why most creditors are more than willing to accept a Consumer Proposal.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Credit Repair, Uncategorized
Nobody looks forward to filing for bankruptcy, but it is one of the most common options that people opt for when they are in debt. Things may become even more complicated when you have child support or alimony duties too. This goes for both the cases; cases where you owe child support or alimony as well as cases where you get child support or alimony.
Both these claims (child support and alimony) are not dischargeable even if you file for bankruptcy. So while you may file for bankruptcy and get away with not paying anything for the moment, you cannot be released from these support or alimony responsibilities.
During a bankruptcy proceeding, both child support and alimony obligations are flagged as priority debts; which means you cannot be discharged from them. As general rule priority debts are given quite a treatment in bankruptcy. The child support payments in which you were lagging behind before you even filed your case, you are required to pay them back in full through whatever repayment plan you come up with.
Those who receive child support are often apprehensive of the fact that once they file for bankruptcy, they may not be able to protect the money they get from the support. Luckily, if you are a person who is finding himself in a similar situation, you can relax because the ongoing payments that you do receive as child support will be protected even if you have filed for bankruptcy.
And not just this but you can have the leftover money which you received as child support, marked as an ‘exempt asset’ which would prevent anybody who wishes to use that money for paying back the creditors from doing so.
Alimony money is your ex husband/wife’s money which they give to you so that you can manage some of the finances even after the divorce or separation. Since this too is considered as a ‘domestic support obligation’, you cannot be discharged from paying it and just like with child support, if you have missed paying any alimony money in the past to your ex spouse, you would be required to make up for that as well. If you are at the receiving end of the alimony money, but have to file for bankruptcy due to some financial setback, you also have to option of protecting that money.
Filing for bankruptcy is a big and serious decision. If you are about to file for a bankruptcy case and have child support or alimony duties too, please make sure that you look into the matter with an experienced attorney who can help you make the right decisions, ask him any relevant questions about any concerns that you may have, ask for clarifications for anything that you are not being able to understand. Remember to hash out all your concerns before filing for any legal matter, be it bankruptcy or anything else, so that you do not experience any troubles with the law later.
by admin | Consumer Proposal, Uncategorized
It is only natural to lose hope after you have filed for a consumer proposal. Many people worry about getting the credit again, and believe that it will never happen. But it is all a myth. You can get a credit card, a home, or even a car after you have gone through the process of a consumer proposal. When you are done repaying your debts, and have met all the requirements of the proposal, you are also officially debt-freehand therefore, responsible enough not to repeat the same mistakes again.
After you have paid back the debts, the credit bureau will be informed about it, and strike the credit rating to approximately R7. This rating will get upgraded to R1 after the duration of three years. An individual also cannot get a credit card until they have repaid the loan and built up their credit. But below are the steps which will facilitate you in rebuilding your credit after you have completed the consumer proposal debt payment.
1. Secured Credit Card
The first step towards rebuilding is getting a secured credit card. The card is called so because the person has to pay around 10 – 100% of the amount before getting that card. That money acts as a protection in times when the individual is not able to repay the amount again. Additionally, when planning on getting a secured credit card, apply for it at places where you haven’t before, and which are not in your repayment plan proposal. Also make sure to apply for a real credit card and not a pre-paid one. You can get 3 or more of such cards and also keep it at good standing to portray that you are responsible enough now to pay off the money.
2. Bill Payment on Time
As mentioned above, paying bills on time is essential. If you fall behind, it will have a negative impact on the credit ratings. So pay bills before the due date or on time and improve the credit ratings. Since the reports regarding the credit information is sent to the bureau on a monthly basis, you can use this as leverage by maintaining excellent credit rating.
3. Low Balances Owing
The debts on your card should be low, which means you must not spend a lot. The estimated of 30% or less of the total credit should be your owing balance. Furthermore, ensure that you are paying back the entire amount every month. If not, make certain that you are repaying at least the minimum amount.
4. Stay in the Credit Limit
Every credit card comes with a credit limit, which is why it is important to stay in that limit or else you can get in trouble with the penalties thrown at you by the creditors. Therefore, this is a deal breaker and the most important rule to follow.
5. Stay on a Budget
In the start of every month, plan a budget and stick to it. You need to keep a check on the money you are getting and the place where you are spending it. This will also help you in recognizing the areas where you tend to overspend, and the additional taxes.
6. Keep a Check on Utility Bills
Many times, people ignore utility and phone bills. However, these are the firms that don’t waste time in reporting such incidents. So secure your credit rating and pay the cellphone and utility bills in a timely manner.
If you need further guidance regarding rebuilding of the credit, you can contact counselors present in your area and get the help you need!
by admin | Consumer Proposal, Uncategorized
Don’t we all end up spending a little too much money on things we hardly need? However, if this problem gets out of hand, you may end up with a huge amount of debt. In that case, you have two options. You can either declare bankruptcy or you can file for a consumer proposal. If you are one of those individuals who do not want to mess up their past legal records with the addition of a bankruptcy to it, then a consumer proposal is the silver lining available to you.
Pros
By opting for a consumer proposal, you can negotiate with your creditor and settle the debt amount; whereas bankruptcy doesn’t provide you with this option. In bankruptcy, you don’t get a choice and you have to settle for what is offered. However, a consumer proposal is a legally binding debt settlement agreement in which the person in debt has to payback a certain percentage of their total debt. These payments take place on a monthly basis, and are set at an affordable range. The payments can take place till the span of 5 years, and after that, they are relieved.
Additionally, the interest with the payment remains frozen at the time of filing, which saves you from paying additional interest money on it. Another extra bonus for selecting a consumer proposal is that it offers immediate debt relief, unlike debt consolidation, where payment of debt with the interest takes place.
Covered Debts
The debts that are covered in consumer proposal are unsecured debts which include:
- Bank Loans
- Finance Company Loans
- Credit Cards
- Income Taxes
- Payday Loans
- Canada Revenue Agency Debts
- Student Loan (more than seven years)
Your secured debts are not discharged and should be paid by you timely. These are:
- Car Loan
- House Mortgage
Reasons to Choose Consumer Proposal
- Many people choose consumer proposal to evade bankruptcy because of greater debt.
- If in future, you are settling for a profession which will cause trouble for you with the history of bankruptcy on it, then a consumer proposal is the best option.
- The process of consumer proposal is easier as it requires meeting with the administrator and formation of a plan. After the plan is approved, you can start the monthly payment without any documentation proof of income.
- Consumer proposal will save your assets, and the payment of your mortgage or car loan is continued without any obstacle. Whereas, a bankruptcy trustee will sell your assets.
- The set monthly income is decided beforehand and you don’t have to fuss over how much money you make.
- In bankruptcy, the higher your income, the greater you have to pay. However, in consumer proposal, a small amount is set which you pay for the period of 5 years.
- If you believe that you will need credit in the future because of which you want your credit rating good enough to be considered, then consumer proposal is the correct alternative.
Before coming to a decision, assess the situation and keep all your options open. You can also consult a nearby counselor who can facilitate you in reaching a conclusion, by considering all the related legal issues.
by admin | Bankruptcy, Consumer Proposal, Debt Management, Uncategorized
Can the debt go away with the death of the debtor? Unfortunately, you can’t skip debt even when you are dead. After your death, your debt is not passed on to your family members until and unless there is some kind of legal documentation present. Your relatives will only be accountable for your debt if they were a joint debtor or a guarantor.
So, if a person who is self-employed dies without paying the complete installment, then that money is collected through the estate, if the individual’s family members haven’t intervened yet and made the necessary payment. However, here, we will talk about the future of other debts such as credit cards, mortgage, and insurance.
Car Loan and Mortgage
If the dying individual was married, then they might have signed up for mutual agreement mortgage. In this case, after the death of one of the spouse, the other spouse is lawfully responsible for paying off the rest of the mortgage. However, there are circumstances when the partner is incapable of paying the debt without the income of the dead spouse. In this case, if you have a proper insurance plan beforehand, it will protect your spouse and other family members who are involved.
If your partner is unable to pay that money, traditionally, lenders go after your property to get the complete payment of the debt. The loans and bills are paid with the remaining assets and the proceeds of the deceased’s estate go to the trustees. Moreover, the creditors are informed about the person’s death, and are provided with a copy of the death certificate for the closing of the accounts.
Credit Card Debt
After your death, all debts on credit cards issued under your name will be disregarded and the lending company will bear the loss. But, if the credit card is issued and co-signed with a spouse, then they are accountable for making the remaining payments. Additionally, make sure to add a clause in your will about the removal of your name from different accounts to avoid any deceitful activities.
Insurance
You don’t want to die and leave your family buried under a mountain of debts. For this purpose, a proper insurance plan is necessary. There is the option of credit card insurance, life insurance, and mortgage insurance available. However, you need to assess their pros and cons and then decide on which is the better option for you.
The distribution of the property cannot take place until and unless all the debts, loans, and bills are paid. After the payment, you can pass on the assets as mentioned in the will. However, if the funds are not enough, they are dismissed as long as there is no co-signer, guarantor, or joint creditor.
To get information regarding the debts you are supposed to pay and which are dismissible, you can get the help of the best counselor and make sure your family doesn’t suffer because of the debt you owe.
by admin | Bankruptcy, Consumer Proposal, Credit Counseling, Uncategorized
People struggling with debts are usually under a lot of anxiety and stress from just thinking about how they will repay them. Well good news: there are more than a few options that might work for you. Each of these options will vary for each person with different situations therefore it is only wise that you take the time out and consult a licensed insolvency firm or consultancy to discuss all your options first and then plan your repayment options accordingly. Your options include:
1. Bankruptcy
When discussing all debt repayment options, it is only wise to start with the most basic one: bankruptcy and work our way through. This type of debt repayment method involves minimum obligations and money that the creditors are likely to receive once the person files for bankruptcy. Usually people have to repay a very little amount of money to attain relief from their debts.
2. Consumer Proposal
The No.1 alternative to bankruptcy, consumer proposals allows a settlement offer with the creditors to repay a portion of your debt over a fixed period of five years. Once you pay off that fixed portion of your debt to your creditors, you are a free man; the remaining debt will be released. But the creditors must be offered or be able to receive much more than they would have received in a bankruptcy. If majority of the unsecured creditors approve of your consumer proposals, others too have to comply with it in case of few exceptional debts.
3. Debt Management Plan
Debt Management plan (DMP) is a viable option to repay debts. You simply need to consult your certified non-profit counselor if you can keep up with a budget with reduced interest rates. Debt Management Plan will help you pay all your debts in a period of a five years with reduced or no interest at all. In case your debts are tax debts, DMP will be of no help.
4. Consolidation
Consolidation may seem like a good idea if you are overburdened with debt. In consolidation of debts, the bank usually lends enough money so that you can combine all your debts into one with lower interest rates. This means reduced monthly payments, making the debt more affordable than before and additional repayment duration. However, this may not be an option for those who already have a bad credit rating.
5. Sell Assets or Liquidate
You may have sufficient assets to sell to pay off your debt but you may not be willing to do so, especially if it means selling your house and uprooting your family. Not only that there are other things to consider when selling assets such as home since there are possible tax consequences and their long term impacts on your retirement plan. So be sure if you want to go that way.
6. Budget
If you can make a budget work for you, you can easily repay your debts over time. If a person believes that just be reducing his spending he will be able to repay all his debts in a given amount of time, it is better to consult a credit counselor to kick start your budgeting plan. But once you do, stick to it.
