What are my options when dealing with my creditors?

 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.

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