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 | Uncategorized
The process of bankruptcy is lawfully designed to help sincere individuals, and offer them a relief from their debts. When this procedure is over, the person who was in debt is no longer obligated to repay the debts, which they had at the time of filing for the bankruptcy, with certain conditions applied.
Types of Proposals
There are two different kinds of proposals. These proposals include a particular amount of money, and the time period till which the debt should be repaid to the creditor. The proposal is put forward by the debtors, however the creditors can vote against or in favor of it, accordingly. The two proposals are:
- Consumer Proposal
- Commercial Proposal
Consumer Proposal
If you owe the amount of $250,000 after leaving out the mortgages, then you can utilize this proposal. It is usually for single individuals and spouses.
Commercial Proposal
On the other hand, this proposal is more feasible for businesses as well as individuals owing greater debt than $250,000. There is no debt limit set in this proposal. It is also called Division I proposal.
CCAA Proceedings
These are specifically for insolvent companies who are in debt of more than $5 million. The companies under this act request for protection in order to plan or arrange the offer for the creditors in the form of a payment. Moreover, the court is responsible for supervising these proceedings.
The debt relief is provided as soon as all the requirements of the selected proposal are met.
Why Bankruptcy Protection is Necessary?
When you are unable to pay off the money, your creditor is permitted to take the necessary legal actions that will force you to repay the debt you owe. This authorized action basically involves filing of the law suit against you, which will lead to freezing of your bank account, and confiscation of your assets and the wages, if it is passed.
According to the Bankruptcy and Insolvency Act section 69, once you have filed for the bankruptcy, the creditors cannot take any official action. Moreover, this also puts a stop to the proceedings that have already started. This state is called as the ‘stay of proceedings’ according to the act. Moreover, the lawful process under the BIA is time consuming and prevents creditors from taking away your assets or income. Additionally, through bankruptcy or consumer proposal, you can get rid of your unsecured debt such as credit card loans, personal loans, and student loans.
Exemptions
Declaring bankruptcy or filing a consumer proposal may be the silver lining for you. However, there are some exemptions that these do not cover. This includes the alimony, secured debts, child support, etc. Secured debts include your vehicle loan and house mortgage. So if you want to keep your house and car, you need to pay for it.
If you are still under stress, and searching for ways to protect yourself from the creditors, you can get the help of counselors who deal with bankruptcy and consumer proposal matters. They will facilitate you in opting for the best alternative so you can start fresh.
by admin | Bankruptcy, Uncategorized
The initial goal of any person who is facing debt is usually to ensure that their family won’t face any trouble if they file for a bankruptcy, particularly their spouse. The question regarding the impact of a bankruptcy on the partner is also commonly asked by those who are suffering from a debt, and looking for the right options. Let’s see what the law has to say about it.
Joint Debt
It is assumed that since you are married to that individual, they are logically responsible for your debts as well. However, this is not how it works in Canada. Your spouse is only accountable for your debt if it was acquired jointly under your names.
So, if the wife signed for a credit card before marriage, the husband is not lawfully responsible for the debt on those credits just because he married her. But if there is a mortgage or a joint credit card that you have signed together after the marriage, then both of you are liable to repay the debt.
One Filing Without the Other
The option to file for bankruptcy without the other partner is also provided. If a wife files bankruptcy without her husband, it means that the wife has discharged her debts. However, the husband still owes money in a jointly held debt. The credit report of the wife will show bankruptcy in it, while the husband’s credit report will remain the same.
In case where the husband’s credit report is damaged with bad ratings because of the wife’s bankruptcy, the responsible agency should be informed, and the issue needs to be resolved on an immediate basis. In conclusion, the credit report of the spouse who is not filing for bankruptcy should remain the same, and changes will only take place in the credit rating of the spouse who is filing for the bankruptcy.
Non-Joint Debts
As the name suggests, these are debts that you haven’t co-signed with your partner, therefore it will not affect the credit report or the rating of your partner, nor will they be in debt because of your debt. The balances are entirely your responsibility; however it may concern your spouse indirectly later on.
If you and your spouse are considering buying a house after the discharge from the bankruptcy, you might face difficulty in qualifying for the mortgage. The reason is that bankruptcy is visible in your credit report; therefore it will be challenging to buy a house together.
Supplementary Credit Cards
When an individual applies for a credit card, they also get a credit card for their partner. If your husband or wife signs up for that card, then they are also legally responsible for the complete balance owed. It doesn’t matter if the account is in your name. Hence, it is essential to check your debts to make certain that your spouse is not in any of the joint accounts, before declaring bankruptcy.
Divorce or Separation
Just like marriage cannot make the other partner liable for the non-joint debts, the divorce doesn’t remove the joint debts either. You can divide your property, but you cannot divide the debt. Both the parties will be equally responsible for repaying that debt, irrespective of the legal separation or divorce agreement.
To understand the complexity of the matter where spouses are involved, you can look for the best counselors, who will inform you about the other alternatives to make the process of bankruptcy simpler for you.
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.
