Debt Problems and Possible Solutions

Yes, there are several ways for people to get out of debt including consumer proposal and debt consolidation. One of our professional team members will explain your options to help you make the best choice for your situation.

The steps to bankruptcy are as follows: assessing the situation, signing the documents, and filing for bankruptcy, reporting your monthly income, the two follow-up counseling sessions, and discharge.

Expect the process to take at least nine months for a first time bankruptcy provided you do not have any income exceeding the standard amount deemed to be reasonable by the Government of Canada. If your income exceeds the standard amount deemed to be reasonable by the Government of Canada it may last 21 months.

The process is longer for a second time bankruptcy. It will last between 24 months and 36 months, depending on income.

According to the Bankruptcy and Insolvency Act, people with $1,000 in debts can declare bankruptcy if they are unable to pay their debts on time. In practice, when someone has less than $5,000 in debts other solutions may be considered.

Most debts, but not all are discharged through the bankruptcy process.

Examples of debts not discharged are:

• Secured debts (e.g. Mortgage or car loan);
• Child support, maintenance, alimony
• Court fines, penalties and traffic offences
• Debts obtained by fraud or fraudulent misrepresentation
• Student loans, if less than seven years since leaving university or college
• Civil claims arising from personal or sexual assault

A secured creditor is a lender to whom you have pledged one of your assets as collateral to obtain a loan or mortgage. For example, when you purchase a home, it is used as collateral for the mortgage. Or if you obtain a loan, the vehicle you own may be taken as collateral against the loan.

One word of caution: If you decide to retain financed assets and then decide later, after bankruptcy, that you would like to return the asset, you may be required to repay the creditor the total amount due. No debtor should make arrangements to reaffirm a loan and retain an asset until the secured creditor has filed a claim with the Trustee and the security is valid and has confirmed that the Trustee has no interest in the asset. If you are unsure whether a creditor has collateral against your assets you can do a Personal Property Registry search at any Ontario registry office.