• Every day we provide debt advice and guidance to consumers with a range of needs, and a common thread is that “knowing is not owing” – people need to have the facts so they can make informed decisions about their unique situation.
• Even if you don’t consider your debt a problem, it’s important to understand your rights and responsibilities – owing money is stressful, there are many ins and outs when it comes to debt, and unfortunately what you don’t know can hurt you financially.

Read on as we break down 10 of the most common consumer debt myths and misconceptions. 

Myths About Debt You Owe

Myth: Creditors Can Always Sue You Over a Debt Owed

Fact: Canadian law sets out a statute of limitations on debt.

In BC, the Limitations Act caps the period of time a creditor has to take legal action against you (i.e. sue you) for a debt you owe. What this essentially means is that while the debt does remain payable, if it has been two years or more since you made a payment or acknowledged the debt in writing, then your creditor may not have further recourse to collect the debt from you, beyond putting notations on your credit history and sending you mail.

Myth: Co-signing Debt Makes You Responsible for Half

Fact: By co-signing a debt, you become equally responsible for repaying 100% of the unpaid balance to the lender.

When you co-sign a debt, if the original borrower doesn’t pay back the debt the lender can demand that anyone listed in the loan or agreement (i.e. the co-signer/co-borrower) repay the entire balance – not half. This type of liability is known as ‘joint and several’.

• Read your applications and lending agreements carefully to understand the terms of borrowing and who is responsible for what – these can change depending on the lender and whether they are considering an application/account for “additional cardholders” or “co-borrowers/co-applicants.” Always check the fine print!

Myth: Marrying Someone Makes You Responsible for Paying Their Debt

Fact: One spouse is not responsible for repaying the debts of the other spouse solely by virtue of marriage or cohabitation.

You are responsible for repaying debts you’ve co-signed for or taken on jointly (as discussed above), or debts triggered as marital debts by the act of separation under the Family Law Act. You cannot be suddenly made liable for a debt owed solely by your spouse just because you got married. Essentially, there is no way to “marry into” a debt.

Am I Responsible for my Spouse’s Debts? Learn More

Myth: You Should Always Buy Insurance Protection

Fact: Credit card balance protection insurance often isn’t “worth” its cost.

Some banks are quick to sell and aggressively promote various insurance products, and while some are worthwhile considerations, like life insurance for a young family, others provide little value in most circumstances – one of these Licensed Insolvency Trustees often caution against is ‘balance protection insurance’.

• Even if you don’t carry a balance each month you pay fees into this product, which can be as high as 1% of the purchases on the card. Over the course of one year, this could take a 20% credit card interest rate to more than 32%.
• The other issue is that in most instances where you’d expect the insurance to help, it does very little. For example, if you lose your job, it may cover the minimum payments for the period you are unemployed – but very little of these payments will reduce the balance you owe on the card.

Myth: Incorporating Your Business Fully Protects Owners Personally

Fact: While corporations may protect owners from their debts to some degree, there is still a personal liability created for certain debts that cannot be avoided.

This personal liability can include debts such as:

• Wages; GST and payroll remittances
• Debts you have signed a personal guarantee for

Many business owners are aware that essentially any debts a sole proprietor or partnership business accumulate are payable by their owners, since there is no distinction between business and owner, but unfortunately, some business owners have a false sense of security when it comes to protecting their personal assets and liabilities if they incorporate their business.

Myths About Managing Debt

Myth: There’s No Forgiveness or Renegotiation Option for Government Debts

Fact: You can have government debts reduced and cleared by filing a Consumer Proposal (or forgiven through bankruptcy).

A Consumer Proposal is a legal debt consolidation remedy that can be used to stop all interest, reduce amounts owing by up to 50-80%, and work out a payment plan for what you can afford to repay. Government debts like taxes, business GST, student loans, benefit overpayments and more – plus debts like credit cards, payday loans, lines of credit, etc. can all be dealt with using this powerful tool, which will also halt a wage seizure or bank account freeze.

Myth: Minimum Payments on Credit Cards are Enough

Fact: Making just minimum monthly payments may keep your account in good standing, but it’s not enough to get debt paid off without incurring considerable interest costs.

Many individuals fall into a trap of just making the minimum payments on their credit cards and assuming that they are making progress towards getting their debt paid off. The reality is that at 20% interest, making minimum monthly payments on a $10,000 debt could take more than 25 years to clear and will cost more than $12,000 in additional – and avoidable –  interest charges.

• Banks must disclose exactly how long it will take to pay off a debt if you make only the minimum payments, so you can see this breakdown on your own bill.
• If you can only afford minimum payments each month, you very likely have a debt problem and should talk with a Licensed Insolvency Trustee as soon as possible.

Compare Your Debt Options

Enter your total amount of debt (excluding mortgage and car loan) and we’ll show you a list of options.

Myth: Your Credit Score is a Reliable Indicator of ‘Financial Health’

Fact: A credit score is essentially a numeric rating used by lenders to determine whether they will loan money, and at what cost.

Part of the problem with taking a ‘good’ credit score as an indication of financial and debt health is that habits that drive a high rating are often at odds with habits that lead to financial success. Since a credit rating mostly measures whether you pay your bills on time it considers nothing about whether those bills are too high or if you have any savings or assets at all.

Myth: Debt Consolidation Must be Done by Borrowing

Fact: You can consolidate your debt without borrowing or interest by making a Consumer Proposal.

Many people considering how to manage their debts believe their options amount to consolidation loans, credit counselling programs, or bankruptcy – but these are not your only options!

• Consumer Proposals are an effective debt solution that allows you to consolidate your debts, repaying what you can afford, with the unpaid balance being forgiven by your creditors.
• This consolidation option requires no borrowing and interest charges (such as a consolidation loan), nor require you to pay added professional fees (such as credit counselling).

Myth: Canada has Government-Sponsored Debt Relief Programs

Fact: The Canadian government does not offer grants or programs for personal debt repayment other than the options provided by a Licensed Insolvency Trustee.

The Canadian government does not have government grants or debt programs available, but it does regulate legitimate legal debt relief options that are available through Canada’s designated debt help professionals – Licensed Insolvency Trustees – namely Consumer Proposals (to consolidate and cut debt) and bankruptcy (to get debt forgiveness), as well as some student loan relief administered through Canada Student Loans.

Get Information and Advice About Your Debt and Debt Options 

The best and safest way to get accurate information about debt, and your debt options and resources, is to reach out directly to a Licensed Insolvency Trustee local to your province and ask to have a free consultation – you don’t need a referral to talk confidentially with us.

• Sands & Associates is available for help seven days a week and we have options for in-person appointments, as well as full support over the phone and online videos.
• In about 30 minutes you should have a clear understanding of your situation and next steps in the debt solution you decide best fits your needs. Knowing is not owing! 

Get solutions, support, and a debt-free plan that’s right for you.

The post Debunking Common Consumer Debt Myths appeared first on Sands & Associates.

Watch the clip here, and read more below:

What is a Reasonable Amount of Personal Debt?

There’s no ‘magic number’ when it comes to understanding how much debt is too much; for some people their debt problem shows up as $20,000, for another $5,000 – or even $100,000 for someone else – and much depends on each person’s unique situation.

Rather than relying on a specific number, consider not just your ‘on paper’ finances, but also how well you are coping with managing your debt and whether you are making clear progress towards paying your debts off.

If you are experiencing any of the following, consider this a sign your debt may be reaching a problem stage, or is potentially on its way to an urgent crisis:

• Often feeling stressed or worried about your debt.
• Making only (or slightly more than) minimum monthly payments on your credit card debt.
• Carrying debts with payments that use up a large portion of your regular income or that would take more than five years to pay off (non-mortgage debt).
• Regularly relying on credit cards (or using payday loans) to meet costs of living, or taking on more debt. (This could be increasing credit limits or considering a consolidation loan to manage debt.)
• Owing a government creditor such as Canada Revenue Agency a balance you can’t afford to pay off.
• Having multiple years of unfiled tax returns, especially if you are self-employed.
• Uncertainty as to who you owe debt to and how much is owed or just avoiding account balances altogether.
• Having borrowed against most of your home equity to consolidate or manage debts.
• Receiving collection action, including calls, wage garnishments or pending court dates.

Debt can snowball over time and because people get used to adapting to cope and manage the situation, dealing with a debt problem daily can all too easily start to feel ‘normal’. It’s important for each of us to do a financial check-in periodically and be honest in how we’re doing.

Identifying and cutting off a debt problem before it’s severe can save you untold amounts of time, stress – and of course money! Take an hour to connect with a Licensed Insolvency Trustee and get some qualified advice about managing your debt, and a personalized debt-free plan.

Debt Options Calculator – Compare Four Ways to Pay Off Your Debt

I Think I Have a Debt Problem – What Should I Do?

The first thing to understand is that if you think you have a debt problem – you’re almost always right. And if this is the case, the second thing to know is that the problem is almost always going to get worse if you don’t take some action.

Talking with a local Licensed Insolvency Trustee in your province is the first and best thing to do.

• Avoid trying to ignore the problem, or assuming you don’t qualify for help.
  • Consumers can access a Licensed Insolvency Trustee directly for support any time at no cost, there are no eligibility requirements to seek advice.
• Be cautious about where else you seek debt advice. Licensed Insolvency Trustees are the only government-qualified debt help professionals.
  • Advertisements from debt consultants and credit counsellors can be misleading and may imply a company is part of a ‘government program’, which is not the case. The only ‘government programs’ to deal with debt are those accessible by working with a Licensed Insolvency Trustee.
  • Be on guard for high-pressure sales tactics, up-front fees, high-interest loans, and unrealistic promises.

Talking with a Licensed Insolvency Trustee

Every day Licensed Insolvency Trustees provide advice to people who are dealing with problem debt or looking to pay off their debt with less interest and/or in less time.

• There is no cost to talk confidentially with a Licensed Insolvency Trustee and get guidance on the options available to you.

When you connect with a Licensed Insolvency Trustee it is our responsibility to ensure you are aware of and understand all your options. We help people make informed decisions on how to address their financial difficulties and move forward. We’ll review potential solutions such as:

• Credit counselling programs, and negotiating directly with your creditors.
• Consolidation loans, and consolidation without borrowing using a Consumer Proposal.
• Bankruptcy, and other laws or resources that may help you resolve your situation.

Many people have a difficult time asking for help or feel embarrassed or ashamed to be struggling with their finances. Please know, you owe it to yourself to get debt help and you are not alone. Licensed Insolvency Trustees are your best allies – here for you with solutions and support, not judgment.

What would your life look like, without debt? Take an hour to learn about your options and get a debt-free plan that’s right for you. Book your free, confidential consultation with a non-judgmental expert at Sands & Associates.

The post How Much Debt is Too Much? appeared first on Sands & Associates.

How Does Bankruptcy Work?

Bankruptcy is a powerful legal debt forgiveness process Canadians are entitled to choose in situations where their debts have become unmanageable. Personal bankruptcy means you get legal protection from your creditors and debt forgiveness that eliminates virtually all your debts.

• The overall goal of personal bankruptcy is to provide the honest but unfortunate person an opportunity to start fresh, free from unmanageable debt.
• For most people bankruptcy is a simple legal process, and you work with a Licensed Insolvency Trustee throughout your bankruptcy. No lawyers, no court appearances, and no need to ask creditors for permission to seek bankruptcy protection.

There are several potential debt management solutions that a Licensed Insolvency Trustee (or Insolvency Estate Manager working with a Licensed Insolvency Trustee) will help you explore during a confidential consultation about your situation and general needs.

During your consultation with Sands & Associates we will review all your options together, including strategies for self-directed consolidation, debt repayment plans and Consumer Proposals, also additional resources that may help you in addressing your debts or are relevant to your circumstances.

Preparing for Your First Meeting with Sands & Associates

What are the Advantages of Filing Bankruptcy?

The main benefits of declaring personal bankruptcy include:

• Getting full forgiveness for almost all types of debt including (but not limited to): credit cards, overdrafts, bank loans, taxes and other Canada Revenue Agency debts, CERB overpayments, student loans, payday loans, ICBC debt and more
  • A personal bankruptcy may also cover business-related debts.
• Removing unaffordable debt repayments from your monthly budget
  • The cost of filing bankruptcy is usually substantially less than repaying your debts in full on a monthly basis.
• Protecting your assets and income that may otherwise be vulnerable to seizure from creditors, including halting wage garnishments
• Stopping the stress of overwhelming debt and getting a financial fresh start that allows you to move forward with your life and achieve your future financial goals
• Having a clear “debt-free” date

In certain situations choosing bankruptcy can be the best way to get out of debt, and, compared to other debt solutions, bankruptcy is often additionally advantageous being the least expensive debt option and the fastest to complete.

What Happens to my Assets if I File Personal Bankruptcy?

Most people keep all their assets during personal bankruptcy. This is because you are entitled to claim certain assets as exempt property – meaning they are protected from creditors. Even if you have assets beyond exempt values, there are options by which you can keep them if you declare bankruptcy.

In BC assets exempt from seizure in bankruptcy include (but are not limited to):

• Equity in a home in Greater Vancouver and Victoria = $12,000
  • In the rest of the province = $9,000
• Household items of a (quick/garage sale) value up to = $4,000
• One vehicle of a value up to = $5,000
  • The vehicle exemption drops to $2,000 if the person is behind on child support payments
• Work tools of a (quick/garage sale) value up to = $10,000
• Essential clothing and medical aids value = Unlimited
• You are entitled to keep funds held in an RRSP, except for contributions made within the 12-month period prior to your date of bankruptcy
  • A transfer between RRSPs is different from a contribution.
• Certain life insurance policies and nearly all pension plans

If you have an ongoing mortgage or vehicle loan or lease in good standing you may choose to continue paying those secured debts outside your bankruptcy. Or you may decide not to continue those agreements and resolve any balances owing from these debts in your bankruptcy.

If applicable, options for managing non-exempt assets and secured debts would be discussed together with your Licensed Insolvency Trustee during the consultation stage before you move forward.

An Overview of ‘Seize or Sue’ and Vehicle Loans in BC – Learn More

What Do I Need to Do to Complete Bankruptcy?

You will have a few key responsibilities to fulfill during personal bankruptcy and your Licensed Insolvency Trustee (or Insolvency Estate Manager) will help guide you and be available for ongoing support throughout. Some of these basic duties include:

• Keeping us advised of your address and other contact information
• Letting us know if your household, family or income situation changes
• Generally cooperating with requests by your Licensed Insolvency Trustee for assistance and information (such as tax information) as we complete your bankruptcy administration

Financial Credit Counselling Sessions: You will complete two private financial credit counselling sessions with a friendly Sands & Associates Qualified Insolvency Counsellor.

These sessions take around 45 minutes each and are supportive conversations intended to offer you resources, strategies and tools for areas of financial literacy such as: budgeting and spending habits, financial planning and goal setting, credit scores, and more.

Completing a Monthly Statement of Income & Expenses (Household Budget Form): Each month you’ll complete a basic form detailing your household income and expenses:

• You may be asked to submit some, or all, of these household budget forms along with proof of your income and certain expenses to your Licensed Insolvency Trustee.
• You will report your spouse’s and other family members’ incomes as part of completing your Statement of Income & Expenses, but they are not expected to make financial contributions to your bankruptcy, nor undertake responsibility for the debts being included in your bankruptcy.

Unless you and your spouse have jointly held debts where they have co-signed responsibility (or a supplementary credit card), there will generally be no impact on your spouse if you declare bankruptcy.

My Spouse is Filing for Bankruptcy – Now What?

Paying Required ‘Surplus Income’ or Bankruptcy Administration Fees (Determined by Income): Surplus income is the amount that your net (after tax) income exceeds government monthly low-income guidelines. Using your Statement of Income & Expenses we will calculate whether you have surplus income, which is then used to determine:

• How long your bankruptcy will last; and
• How much you will need to pay each month.

How Long Does Bankruptcy Take?

You will be ‘in bankruptcy’ for a period that varies depending on a few factors and during this period you’ll be completing the duties previously detailed so you can successfully exit (i.e., be discharged) from bankruptcy. Most bankruptcies will be completed in:

• 9 months with an ‘Automatic Discharge’. This is by far the most common and applies when there is:
  • No prior bankruptcy, no opposition to discharge, all duties completed; and
  • Household income does not require $100 or more surplus income to be paid.
• If your household income is higher than the government’s ‘low income’ threshold you might instead expect an ‘Automatic Discharge’ after 21 months when there is:
  • No prior bankruptcy, no opposition to discharge, all duties completed; and
  • Household income requires payment of $100 or more of surplus income.

Once your bankruptcy is started your debts will be frozen right away and creditors will not be allowed to pursue you for payment. Upon your official discharge from bankruptcy the debts included will be written-off and forgiven by your creditors. You are now debt-free!

Our goal is for you to have a stress-free, no-surprises experience, exiting bankruptcy in the shortest possible time to achieve full forgiveness of your debts.

It is also possible to file bankruptcy even if you’ve been bankrupt before. It’s important (whether you’ve declared bankruptcy before or not) to explore all your options with a Licensed Insolvency Trustee before moving forward. Many people find they can avoid bankruptcy with an alternative such as a Consumer Proposal.

Can I Declare Bankruptcy More Than Once? Learn More

How Much Does Bankruptcy Cost?

If your income is such that you do not have any surplus income requirements, you can expect to pay a basic administrative fee for your bankruptcy instead of making surplus income payments.

• In most cases the cost payable by you to file for bankruptcy is $2,700.
  • At Sands & Associates we do not ask that you pay this all up-front and can often arrange for you to pay by monthly payments throughout your bankruptcy.
• The fees for bankruptcy include services and costs paid directly by your Licensed Insolvency Trustee during the bankruptcy administration, which may include (but are not limited to):
  • Government filing fees
  • Financial counselling sessions
  • Preparation and filing of income tax returns
  • Personal Property Registry Search charges

Your regular earnings such as wages, salaries, commissions, self-employment income, pensions, etc., will all continue to be paid directly to you throughout your bankruptcy.

• Other government benefits and credits (Canada Child Benefit, GST/HST Credits, etc.) will also continue to go to you as usual, with the general exception of certain income tax refunds.
• There is no cap or maximum amount of income you can earn during your bankruptcy.

Being able to plan your household budget and expenses is important – we will help you estimate your bankruptcy costs before you proceed. We want you to feel confident and in control as you move ahead.

When is Filing for Bankruptcy the Best Option?

How Long Does Bankruptcy Stay on My Credit?

In most situations only you, your creditors, your Licensed Insolvency Trustee and the Office of the Superintendent of Bankruptcy (“OSB”) will know about your bankruptcy, and credit bureaus will obtain information relevant to their records directly from the OSB.

• The OSB is the government body that oversees all Licensed Insolvency Trustee matters and filings that the Bankruptcy and Insolvency Act applies to, including bankruptcies and Consumer Proposals.

A bankruptcy will be noted as an R9 on your credit history for six years following your discharge from bankruptcy. This is the same duration as many other common transactions such as missed payments or creditor judgments, and the note is temporary – credit history and scores can change dramatically in as little as two to three years.

• Although many people decide to wait until after bankruptcy to take on new credit, this isn’t a requirement. It is possible to apply for and be granted credit long before this R9 note expires from your credit history, including vehicle financing, mortgage renewals, etc.
  • It is an achievable goal to be considered for a mortgage loan in as little as two-to-three years after completing bankruptcy and guidance on establishing credit is part of the bankruptcy financial counselling process.

There is life (and credit) after bankruptcy!

How Do I Claim Bankruptcy?

There are three basic steps to officially starting bankruptcy with Sands & Associates:

1. Have a confidential, non-judgmental consultation with a Licensed Insolvency Trustee (or Insolvency Estate Manager working with a Trustee)
2. Complete an information form so your bankruptcy documents can be prepared for you
3. Sign the official bankruptcy documents

Your Licensed Insolvency Trustee will take care of the administration of your bankruptcy filing including working on your behalf in creditor communications and notifying your creditors of your decision to file.

We understand that no one wants to be in a position where they are considering bankruptcy and that you may be experiencing a lot of stress and anxiety as you come to the decision to reach out for help. Please know that whatever challenges you have been dealing with, there are solutions – and we’re here to help you find the one that’s right for you and your situation.

Explore your options and learn how bankruptcy could get you to a debt-free financial fresh start. Book your free confidential debt consultation today, virtual and in-person services are available across BC.

The post Is Personal Bankruptcy Right for Me? appeared first on Sands & Associates.

Why Consider a Consumer Proposal?

A Consumer Proposal is a debt solution that allows you to legally consolidate all your debts into one repayment plan that usually offers creditors a partial recovery of your debt, in full satisfaction of the amount owing.

• Consumer Proposals provide an opportunity to consolidate your debt without financing and interest charges and allow you to have your debt partially forgiven without claiming bankruptcy.
• Debt repayment terms in a Consumer Proposal are flexible and tailored to your individual situation, making a Consumer Proposal a suitable debt management option in many different circumstances.

Consumer Proposals can only be filed by working with a Licensed Insolvency Trustee, and you’ll have our professional help and qualified expertise throughout the process.

What are the Advantages of Consumer Proposals?

From cutting monthly payments to creditor protection to debt cost savings, there are many built-in benefits to Consumer Proposals. Some advantages to choosing a Consumer Proposal over other debt management options include:

• Consolidating all your debt into one manageable repayment plan
  • Virtually all types of debt can be included in a Consumer Proposal, including (but not limited to) credit card debt, overdrafts, tax debt, payday loans, student loans, CERB overpayments and more.
• Stopping ongoing interest, financing costs and other creditor charges
  • Debts become ‘frozen’ and will not accumulate more interest or fees.
• Reducing the amount of debt you must repay down to what you can afford
• New monthly Consumer Proposal debt payments are usually substantially lower than prior monthly debt payments
• Breathing room and keeping your assets safe and protected from creditor collections and seizures
  • Creditors must stop contacting you for payment and must discontinue all collection actions.

Filing a Consumer Proposal with Sands & Associates

Sands & Associates’ Licensed Insolvency Trustees are often successful in filing Consumer Proposals that reduce a person’s debt by up to 50-80%. Some considerations to determine the amount of debt reduction that may be possible in your Consumer Proposal can include:

• Your overall personal situation and finances including income, expenses and household size.
• How much debt you have, and who your creditors are.

Once your Consumer Proposal has been filed your debts will be frozen and creditors will no longer be able to add interest and other charges to your debts. This freeze will also stop collections including phone calls, court actions, and even wage garnishment (in many cases, preventing these actions before they start).

Upon completion of your Consumer Proposal the debts included in your Consumer Proposal will be written-off and unpaid balances will be considered legally forgiven by your creditors.

Compare Your Debt Options

Enter your total amount of debt (excluding mortgage and car loan) and we’ll show you a list of options.

Are There Debts a Consumer Proposal Can’t Cover?

Almost all debt can be completely paid off in a Consumer Proposal, with few exceptions. Debt that may be included in your Consumer Proposal but have a remaining balance that needs to be paid after your Consumer Proposal is finished are limited to very specific debts:

• Fines imposed by a court and certain court-awarded damages
• Money owing due to theft or embezzlement
• Liabilities from obtaining property or services by false pretenses or fraudulent misrepresentation
• Alimony or maintenance payments
• Government student loans if your Consumer Proposal is filed within seven years after the end of your studies
  • If it has been less than seven years since the end of your studies, your unpaid government student loans and interest will need to be repaid, less money your creditor was paid through your Consumer Proposal.
  • However, if it has been seven years or more since you last attended school, all your student loans will be fully covered and forgiven through your Consumer Proposal.

If applicable, survivable debt balances would be discussed in detail together with your Licensed Insolvency Trustee during the consultation stage. Our goal is for you to have a “no surprises” experience and feel confident and in control when you move forward with a Consumer Proposal.

Learn More About Solutions for Government Debt Forgiveness

What Do I Need to Do During my Consumer Proposal?

Besides making whatever payments your Consumer Proposal calls for, other requirements are minimal and typically include:

Two Private Financial Credit Counselling Sessions: You’ll complete two sessions (around 45 minutes each) with one of Sands & Associates’ friendly Qualified Insolvency Counsellors.

These sessions are supportive conversations intended to offer you tools, strategies and resources for areas of financial literacy such as budgeting and spending habits, financial planning and goal setting, credit scores, and more.

Filing Tax Returns: Ensure your tax returns are filed up to date and new balances owing are paid.

• If you already have a balance owing to Canada Revenue Agency (“CRA”) your tax returns and any applicable business GST/HST returns should be filed up to date before your Consumer Proposal is made, for CRA to determine how much is owed.
  • In some cases we can help you catch up on tax returns that need to be filed.
• If you regularly owe money on your tax returns, we may also include a clause in your Consumer Proposal that allows you to consolidate the exact tax amount owing up to the specific date you start your Consumer Proposal – even if that tax return is not yet due.

Attend Meeting of Creditors (rarely applicable): If your original proposal offer is not accepted by creditors, a meeting of creditors may be called by your Trustee. This meeting’s objective is to provide creditors an opportunity to reach an agreement on repayment terms acceptable to all parties.

• Nearly 99% of Consumer Proposals filed receive creditor approval as they provide for more money repaid to creditors than if an individual chose bankruptcy. What’s more, making a Consumer Proposal does not forfeit your option to seek bankruptcy should you later wish to do so.

Income: You are not required to report your household income during your Consumer Proposal.

Your regular earnings such as wages, commissions, self-employment income, pensions, etc., all continue to be paid directly to you throughout your Consumer Proposal. Other government benefits and credits (tax refunds, Canada Child Benefit, GST/HST Credits, etc.) will also continue to be paid to you as usual.

Does a Consumer Proposal Affect My Spouse?

Generally your spouse (or other family members) would not be impacted in any way by your decision to file a Consumer Proposal. The exception to this would be if your spouse is legally responsible for your debts together as a co-signer, co-cardholder or guarantor.

Read More About Dealing with Debt and Financial Stress in Your Relationship

Many people tell us that if anything, using a Consumer Proposal to manage debt and negate its stress has a positive impact on their lives and relationships.

What is the Cost To Do a Consumer Proposal?

Whatever repayment you are offering in your Consumer Proposal terms includes all administrative fees, the cost of which will essentially be paid by your creditors. Licensed Insolvency Trustee fees are set by government tariff, not a ‘fee for service’:

• These fees cover everything, including the government’s charge to register your Proposal, professional services, disbursements and counselling costs
• Fees are calculated to legal guidelines and simply deducted from the funds your creditors receive
  • No additional payments are needed from you beyond what you are offering to creditors

Sands & Associates does not charge an up-front fee to start your Consumer Proposal and debt consultations and ongoing support throughout your Consumer Proposal are always free.

How Long is a Consumer Proposal?

The length of time a Consumer Proposal lasts depends on your needs and specific situation.

• Most Consumer Proposals will intend for you make monthly payments, with terms of up to 60 months, but some Consumer Proposals may offer a one-time lump sum payment instead.
• Although some people may offer an asset (or funds from the sale of) as part of their Consumer Proposal, this is less common. Generally you will keep all your assets.
• You can make additional payments throughout your Consumer Proposal and even pay-off your Consumer Proposal early at any time without penalty.

How Does a Consumer Proposal Impact my Credit?

In most cases only you, your Licensed Insolvency Trustee, the Office of the Superintendent of Bankruptcy (“OSB”), and your creditors will know about your Consumer Proposal, and credit bureaus will request information for their records directly from the OSB.

• The OSB is part of Industry Canada and is the government body that oversees all Licensed Insolvency Trustee matters and filings that the Bankruptcy and Insolvency Act applies to, including Consumer Proposals.

A Consumer Proposal will show as an R7 note on your credit history for three years following completion, or six years from the date it started (whichever comes first). This is similar duration to informal credit counselling debt repayment plans.

• Many people find they can gain a strong credit rating faster by settling their debts with a Consumer Proposal rather than if they continue with debt repayment on their own.

It is possible to apply for and be granted credit before this temporary R7 note expires from your credit history, including vehicle financing, mortgage renewal, etc. Guidance on boosting your credit rating and other financial resources form integral parts of the financial counselling process.

There are many circumstances and events that cause situations where it is no longer possible to continue managing debts on your own, or as you may have originally planned. Please know that whatever challenges may have happened, there are solutions that work – and we’re here to help you find the one that’s right for you!

Explore your options and learn how a Consumer Proposal could get you to debt-free. Book your free confidential debt consultation. Virtual and in-person services are available across BC.

The post Is a Consumer Proposal Right for Me? appeared first on Sands & Associates.

If you have received correspondence indicating you may need to repay some, or all the emergency benefits received, or you are worried you may need to repay these benefits, read on to learn about what you can do if you are unable to afford repayment.

About Canada Emergency Response Benefit (“CERB”) Repayments

There are a few scenarios that could result in you returning or being required to repay the Canada Emergency Response Benefit you previously received:

• You resumed your employment earlier than anticipated
• You received retroactive pay from your employer
• You received CERB via both Employment Insurance (Service Canada) and Canada Revenue Agency (CRA) for the same period
• You were not eligible to qualify

From discussions with our clients thus far, confusion over the minimum amount of income needed to qualify for CERB is emerging as a prevalent cause for potential repayment. The main requirement of $5,000 of income earned either in 2019 or in the 12-month period prior to receiving CERB payments appears to not have been widely understood.

We’ve heard from self-employed individuals who mistakenly believed that their “gross income” (i.e. before deducting business expenses) was the key metric to qualify. Subsequently, some individuals have found that their “net income” (i.e. after deducting business expenses) did not exceed $5,000 which made them ineligible to receive CERB payments.

In addition, it’s important to understand that there are certain types of income that are excluded in the qualifications criteria for CERB such as investment income, pension income, Canada Child Benefit, and others.

The Canadian Government took a deliberate approach of prioritizing speed of issuing payments above performing checks to ensure eligibility. The result is that an unknown amount of CERB was issued to individuals who may not have met the qualifying criteria and CRA is now examining each case to see if repayment is warranted, several months after the final cheques were issued to Canadians.

What Should I Do if I Have to Repay CERB?

Finding out that you may have to repay CERB, or any other unexpected debt, can feel overwhelming and incredibly stressful, particularly as most people do not have the ability to simply repay an unanticipated balance outright. CERB was intended to provide a short-term replacement of income during the COVID-19 pandemic to cover immediate living expenses – it’s no surprise that just about everyone we speak to spent these funds in the month they were received to cover the necessities of everyday living.

Although Canada Revenue Agency has begun sending letters that include a request to repay ineligible CERB payments, they have stated that they:

• Will have flexible payment arrangements, determined on a case-by-case basis.
• Will not charge penalties or interest on repayments, “where errors were made in good faith” – unlike with other types of government debts.

Learn About Other Types of Government Debts, and Having Them Forgiven

If you have discovered that you must repay CERB amounts received but are unable to repay the full amount you owe immediately, you may wish to contact CRA to discuss repayment arrangements that are manageable for your specific situation. You can reach a CRA representative about a repayment plan at: 1-800-959-8281 (9AM-5PM – local time).

If you are concerned about the impact of having received CERB on your taxable income for 2020, it is important to know that taxable amounts will be adjusted if repayments are made, regardless of the reason for the repayment.

What if I Can’t Repay my CERB?

If you find yourself in a position where you are unable to repay CERB there are a few key points to be aware of historically when it comes to CRA balances owing:

• Although CERB repayments are still very new, we anticipate that it will be treated the same as other government debt that are not considered debts that will expire under BC’s Limitation Act (the provincial statute that limits the time in which a creditor may take legal action against you).
• Attempting to avoid outstanding CRA balances by non-filing of income tax returns is not an effective long-term strategy.
  • If you have unfiled income tax returns CRA may resort to actions such as placing holds on your bank account or issuing “arbitrary assessments” of your tax returns, creating tax debt based on estimates of your income.
• Besides repaying the balance in full, accessing legal debt resources such as a Consumer Proposal or bankruptcy working with a Licensed Insolvency Trustee is the only method CRA will accept to negotiate or forgive government debts.
  • It is the professional opinion of many Licensed Insolvency Trustees across Canada that “honest but unfortunate” CERB repayments will be classed as dischargeable (forgivable) debt, as is the case with most types of government debts.

How Does the Government Collect on Debt?

CRA is a forceful creditor who can quickly take steps to collect on unpaid debts that are more difficult for other types of creditors access. Common remedies that CRA may apply when collecting on government debts may include:

• Wage garnishment
  • Garnishments can be applied to many types of earnings, not just employment income
• Seizure of future income tax refunds
• Seizures or holds on bank accounts
• Registering a lien on your home or other property

Learn More About Wage Garnishment, and How to Stop it

If you are feeling the stress of debt or pressured to find a solution, understand that you are not alone. A Licensed Insolvency Trustee can help you assess your overall situation and options that are available to you that can help you effectively eliminate virtually all types of debts and move forward with your life. When you connect with a Sands & Associates representative we will take the time to understand your concerns and goals and offer non-judgmental, caring support throughout the process.

In Canada Licensed Insolvency Trustees are the only debt help professionals fully empowered, qualified, and endorsed by the federal government to assist individuals with legal debt help services.

Solutions to Manage Government Debts

Many people are surprised to learn that they have rights and remedies available to them that can allow for legally reducing or fully forgiving even government debts. In addition to options that can deal with consumer debts such as credit cards, lines of credit or payday loans, debt solutions (such as those noted below) offered by Licensed Insolvency Trustees can also cover government debts, including:

• Repayment of government benefits
• Provincial, federal (and private) student loans
• Income tax debt
• Business GST and payroll debt
• ICBC debt
• Outstanding MSP debt

Consolidate with a Consumer Proposal: Consumer Proposals are a unique but little-known debt management tool for Canadians that allow you to consolidate your debt into one reduced balance with a manageable monthly payment, without borrowing, paying interest, or even added administration fees. Making a Consumer Proposal can be a powerful solution that drastically cuts your debt, with the unpaid portion being written-off by your creditors.

Declare Bankruptcy: In BC the personal bankruptcy process is very private, straight-forward and may last as little as 9 months. If you are unable to make progress towards repayment of your total debts, you may find advantages to declaring personal bankruptcy as a means of having your debts fully forgiven by your creditors.

Access Debt Help Services Online

Debt management and bankruptcy services provided by Licensed Insolvency Trustees are a designated essential service, and as BC’s largest firm of Licensed Insolvency Trustees focused exclusively on debt help for individuals and small businesses, Sands & Associates is committed to ensuring residents throughout the province can access reputable professional debt help conveniently and safely. Working with Sands & Associates, BC residents can access our full suite of services including but not limited to:

• Free, confidential debt consultations and a full assessment of all available debt options, conducted over the phone or video conferencing.
• Making a Consumer Proposal to consolidate debt without borrowing; filed, served to your creditors and completed online.
• Filing bankruptcy to gain protection from your creditors and have debts forgiven; with the full bankruptcy process being completed online.

Get started with your debt-free plan today – book your free confidential debt consultation with a qualified BC debt expert now.

This content is not intended to be specific legal advice; it is intended to be a simple guide in layman’s language to provide a basic overview only. E. Sands & Associates Inc accepts no responsibility for its use other than as intended. The law is an ever-changing body of statutes and decisions, and the reader is advised to seek legal counsel for specific matters relating to their situation. 

The post What You Should Know About CERB Repayment Debt appeared first on Sands & Associates.

Many people are surprised to learn that you can work with a Licensed Insolvency Trustee to declare bankruptcy or file a Consumer Proposal that can include government-related debts. This is due to the specialized qualifications and regulation of Licensed Insolvency Trustees, giving them the ability to help you access solutions available under Canada’s Bankruptcy and Insolvency Act.

Read on to learn more about common government debts that can be forgiven using these debt resolution methods:

Tax Debt

If you are facing Canada Revenue Agency (“CRA”) tax debt it’s important to understand that interest and penalties can compound very quickly, making even a small initial balance difficult to pay off – CRA is also a powerful creditor who can begin aggressive garnishments, which could include wage and asset seizures, virtually overnight. Furthermore, unlike many other types of debts, these government debts are not confined by BC’s Statute of Limitations, meaning that they do not expire and you cannot “wait them out”.

Outstanding debts you have with CRA can be included in a personal bankruptcy or consolidated in a Consumer Proposal. This includes balances due for personal income taxes, GST or PST, as well as corresponding interest and penalties. All accruing interest is halted, as are wage garnishments or bank account seizures that may already be in place.

A Consumer Proposal or personal bankruptcy can both effectively stop the priority nature of CRA debts and collections, reducing them to the same importance as common consumer debts such as an unpaid credit card.

Other than filing bankruptcy, making a Consumer Proposal is the only method that can be used to negotiate a reduced balance owing with CRA:

• Declaring bankruptcy can permanently write-off CRA tax debt.
• Filing a Consumer Proposal can consolidate and reduce your CRA tax debt down to what you can afford to repay, with the remaining balance being forgiven.

Learn More About Managing Tax Debts in a Consumer Proposal or Bankruptcy

Medical Services Plan (MSP) Debt

BC MSP premiums were eliminated January 1, 2020 however, if you were required to pay MSP premiums and still have an unpaid balance, this remains payable and collection actions on overdue accounts may still be taken.

MSP premiums were based on your previous years’ income tax returns. If you were behind in tax filings this may have resulted in you being ineligible for premium assistance and charged the full premium amounts. MSP’s Retroactive Premium Assistance provides adjustments for previous premiums and may be available to help reduce your balance.

Regardless of premium assistance standings, both your outstanding MSP balance and any compounding monthly interest charges can be eliminated and written-off through filing a bankruptcy or Consumer Proposal in BC.

Connect with a Licensed Insolvency Trustee from anywhere in BC without leaving the comfort and privacy of your home – book your confidential free debt consultation today.

Employment Insurance (EI) Debt

An overpayment of Employment Insurance benefits can occur from a few different causes such as application and reporting errors, or decisions made regarding insurability. The Canada Revenue Agency provides collection services for money owed for EI overpayments and if you are unable to repay the balance you may be subject to the same consequences that CRA takes for collecting tax debts.

Income garnishments as well as asset liens and seizures by CRA can occur if an EI overpayment is not repaid. You could also expect to have any tax refunds or personal GST credits you were otherwise anticipating be withheld by the CRA and applied to your balance owing.

Social Assistance Overpayment Debts

Provincially governed, social assistance overpayment debts are generally forgiven under a bankruptcy or Consumer Proposal.

Does Including Government Debts in a Bankruptcy or Consumer Proposal Mean I Can’t Access Future Benefits?

It is important to understand that even if you declare bankruptcy or make a Consumer Proposal to eliminate government debt, you will not be prevented from receiving future government benefits.

Your eligibility for EI benefits, emergency benefits, housing benefits, pensions and more will not be impacted by a prior government debt being included in or written-off as part of your bankruptcy or Consumer Proposal.

Learn About Debt Forgiveness with Personal Bankruptcy: Step-by-Step

Student Loans

Whether your student loans are private, provincial or federal, these debts and related interest charges can also be part of the debts included in a personal bankruptcy or Consumer Proposal filed in BC. Two key considerations that determine how your student loans are ultimately resolved depend on the date your studies ended, as well as the type of student loans you have.

• If more than seven years have passed since your last study date, you can be released from your government student loans using a bankruptcy or Consumer Proposal.
• In the event you have not been out of school for seven years you would get relief from making payments on government student loans during the period that your bankruptcy or Consumer Proposal is active. Once your bankruptcy or Consumer Proposal is finished you would then begin repaying these surviving debt balances (less any amounts received through your Consumer Proposal) and any accumulated interest.
  • Some people choose to continue making payments on their surviving student loans even while their bankruptcy or Consumer Proposal is in progress. This is your option.
• If only five years have passed since you last attended school, it may be possible for you to apply under a hardship provision to BC court to have your government student loans discharged like the other debts included in your bankruptcy or Consumer Proposal.
  • Under this provision your student loans may be released where you can satisfy the court that you acted in good faith in your obligation to repay your student loans, and you have experienced, and will continue to experience, financial difficulties that would prevent you from repaying these debts.
• Privately (bank) held student loans and other student financing debts will be treated as any other type of general consumer debt (such as a credit card) and can be eliminated in both a bankruptcy or Consumer Proposal.

In situations where your recent government student loans only form part of your overall debts, declaring bankruptcy or making a Consumer Proposal can still be beneficial debt options since all your other debts (tax debt, credit cards, overdrafts, etc.) may be wiped out, making the surviving student loans much more manageable.

Read More Tips for Repaying and Discharging Student Loans

ICBC Debt 

ICBC debts may be categorized in a number of different ways such as: claims, “motor vehicle indebtedness” including outstanding AutoPlan insurance payments or unpaid Driver Penalty Point Premiums, Driver Risk Premiums, unpaid fines for offences, or motor vehicle related offences under the Criminal Code such as unpaid speeding tickets.

A Licensed Insolvency Trustee can help you investigate the type of ICBC debt you have and how each may be dealt with if you decide to make a Consumer Proposal or file bankruptcy – both of these options can result in ICBC debt forgiveness or having the overall balance cut.

Most ICBC debts will be forgiven under a Consumer Proposal or bankruptcy – even in a motor vehicle accident where you are found to be at fault and ICBC pays a settlement to another party, you may still be able to get relief from the resulting debt.

There could be portions of your overall balance owing to ICBC that fall into categories of debts that can survive these processes; if your Licensed Insolvency Trustee suspects this may be the case they will (with your permission) communicate with ICBC directly to clarify how a debt is categorized and determine any portion that might survive before you commence your debt relief process.

Temporary restrictions may be placed by ICBC, such as:

• Temporary denial of license, insurance renewal or subsequent license plates:
  • During the period of your bankruptcy prior to your discharge ICBC may retain their right to prevent you from licensing or insurance (generally renewals). Some of the criteria by which ICBC may review your individual circumstances includes:
    • The circumstances under which the debt arose.
    • Whether your ICBC debt was a significant portion of your overall debt load.
    • Hardships that may result from the refusal of these renewals.
    • The impact of a refusal on your employment, education, or ability to obtain medical treatment.
      • In situations where your employment is dependent on you holding a driver’s license, your employer may be able to write an official letter to ICBC stating such – this may result in a reversal of ICBC’s decision.
• Temporary denial of access to AutoPlan monthly insurance payments, resulting in you needing to renew insurance in prepaid 3, 6 or 12-month increments.

ICBC generally will not refuse licenses and insurance after your eligible debts have been discharged through your bankruptcy, or your filed Consumer Proposal has been accepted by your creditors.

Sands & Associates Licensed Insolvency Trustee Blair Mantin discusses dealing with Canada Revenue Agency debts on Global News.

Facing an unmanageable balance owing from the provincial or federal governments of Canada can be overwhelming and stressful. While some types of government debts are simple to resolve, others involve complex and ever-changing bodies of law – it is important to find out the facts and options for your situation as soon as possible. If you are struggling, the best course of action is to contact a Licensed Insolvency Trustee to get advice about how to manage government debts, as well as any other types of debts you may have. Licensed Insolvency Trustees are the only Canadian professionals legally able to provide debt solutions to work with all creditors on your behalf; consultations are always free, confidential – and at no obligation.

Stop debt-stress and get a plan to be debt-free today. Book your free confidential debt consultation to connect with a caring non-judgmental BC Licensed Insolvency Trustee.

_{This content is not intended to be specific legal advice; it is intended to be a simple guide in layman’s language to provide a basic overview only. E. Sands & Associates Inc accepts no responsibility for its use other than as intended. The law is an ever-changing body of statutes and decisions, and the reader is advised to seek counsel for specific matters relating to their situation.} 

The post Debt Solutions for Having Government Debts Forgiven appeared first on Sands & Associates.

One of the major advantages to choosing a Consumer Proposal is that your consolidated debts can be reduced down to what you can afford to repay. Consumer Proposals are often successful in offering as little as 25-50% of your total debt, with no additional interest charges or administration costs, making monthly payments very affordable.

The number of consumers who consolidate their debts by making a Consumer Proposal to their creditors has been steadily increasing across Canada, but this powerful debt option is still relatively unknown to many people. Read on to learn more about what happens when you file a Consumer Proposal in BC.

Starting Your Consumer Proposal

If you want to file a Consumer Proposal, you should connect directly with a Licensed Insolvency Trustee local to your province. They will help you assess whether a Consumer Proposal would be the best option to deal with your debts and assist you in working out what payment terms to offer your creditors. Some considerations to determine the amount of an appropriate debt settlement offer include:

• Your income, expenses and overall household situation.
• How much debt you have and to whom the debt is owed.

Once you have worked with your Licensed Insolvency Trustee to structure the proposal terms (i.e. monthly payment amount and number of months) you will sign official Consumer Proposal documents and receive immediate protection from your creditors. These documents can be prepared with a very quick turnaround time should you have a pressing situation such as a garnishment or legal action commencing.

Your Licensed Insolvency Trustee will then register your signed Consumer Proposal with the Office of the Superintendent of Bankruptcy (the government body that regulates and oversees Insolvency Trustees) and notify your creditors of your offer. All of this is typically done electronically to expedite the process.

Your Consumer Proposal being officially registered will trigger a “stay of proceedings” essentially crystalizing your debts by freezing all future interest and finance charges. Your Licensed Insolvency Trustee will step in the middle between you and your creditors and will ensure creditors cannot pursue you for payments. This protection is very broad and covers several key areas, including:

• Stopping payment requirements
• Freezing your interest charges
• Halting collection actions and wage or bank account garnishments

The entire Consumer Proposal process can be completed remotely with your consultation and official filing done online from the comfort, convenience and privacy of your home.

Learn More About Starting the Consumer Proposal Process

After Your Consumer Proposal is Filed

Once officially filed your creditors have 45 days to consider your Consumer Proposal and vote on whether they accept the terms you have offered. In order to vote your creditors will need to file a “proof of claim” with your Trustee, proving that the debt exists and confirming the amount owed. Your creditors may:

• File their claim and vote to accept your proposal
• File their claim and vote to accept your proposal, provided you agree to some modified terms (such as a higher monthly payment, or longer term)
• File their claim and vote to reject your proposal
• Abstain from voting and/or abstain from even filing a proof of claim

If more than 50% of your creditors (by dollar value) vote to accept your Consumer Proposal then it will be legally binding on all your creditors, even those who did not vote, or voted to reject your proposal.

• Where one or more of your creditors who is owed at least 25% of your overall proven debts requests it, a “meeting of creditors” may be held within the initial 45-day period.
• This meeting is rare, and is normally held by telephone, with the objective of providing your creditors an opportunity to ask questions and try to reach an agreement with you on modified proposal terms that will be acceptable to all parties.

Making a Consumer Proposal does not forfeit the option to seek bankruptcy. In the unlikely event your Consumer Proposal is unsuccessful, you still have the option to declare bankruptcy to deal with your debt. Conversely, if your situation has changed and you can make some repayment on your debts, a Consumer Proposal can be filed by a person in bankruptcy, annulling the bankruptcy.

Once Your Consumer Proposal is Accepted by Creditors

15 days after the 45-day voting period has passed and your Consumer Proposal has been accepted, your Consumer Proposal will also be deemed to be legally court-approved. You will then start fulfilling the terms of your Consumer Proposal. Although terms are flexible and can be tailored to your unique situation, this will generally involve:

• Making monthly payments to your Licensed Insolvency Trustee, to be accumulated and periodically paid to your creditors.
  • Some people may offer a lump sum payment instead of a monthly payment, or funds from the sale of an asset – but this is less common.
• Attending two private financial counselling sessions focused on money management and credit resources. There is no additional cost for these sessions or for any Consumer Proposal services – all costs are paid out of the monthly payment you are offering to creditors.

How Does a Licensed Insolvency Trustee Get Paid? Learn More

What Happens to Creditors Not Covered Under the Consumer Proposal?

If most of your creditors – by dollar value – have voted to accept your Consumer Proposal then and all “against votes” from other creditor(s) will simply be overruled. The dissenting creditor(s) will still be bound by the terms of the Consumer Proposal accepted by the majority creditors and will be legally prohibited from contacting you for payment outside the proposal.

There are a few types of debts that will survive a Consumer Proposal, although your proposal will still offer payments to them, with the unpaid portion being collectable following your proposal’s completion. These include:

• Child or spousal support payments
• Court-imposed fines
• Student loans where you have been out of school for less than 7 years

Compare Your Debt Options

Enter your total amount of debt (excluding mortgage and car loan) and we’ll show you a list of options.

What Happens to my Mortgage or Car Loan in a Consumer Proposal?

When you have a mortgage or vehicle financing those debts are called “secured”, meaning the creditor holds an asset as “security” or “collateral” for the debt. These are treated a bit differently than other debts in a Consumer Proposal that are called “unsecured”, such as a credit card debts, income taxes or other common debts. With secured debts, your options when filing a Consumer Proposal include:

• You can decide to keep the asset tied to the debt, continuing with the payment arrangements in place outside of your Consumer Proposal (i.e. keep making payments on a car you wish to keep).
  • If your secured debts are in good standing and paid up to date there is normally no impact to these accounts, and a Consumer Proposal generally does not disrupt a mortgage renewal that occurs while your proposal is in progress.
• You might alternatively decide you do not want to keep the asset, in which case the start of a Consumer Proposal can be a good time to surrender the asset and end any ongoing commitment. If there is a shortfall for this debt (i.e. you have a balance owing after the asset has been surrendered) this amount can be included in your Consumer Proposal.

Can I Change my Consumer Proposal Once Its Been Filed?

If your situation changes during your Consumer Proposal and you can no longer afford your Consumer Proposal payments, it may be possible to modify your repayment terms by filing an Amended Consumer Proposal.

• Your creditors would be notified of your intention to change your proposal, and they would be asked to vote to accept the revised Consumer Proposal. Like the original proposal, if most creditors (by dollar value) vote in favour, the new terms would then take effect.

What Happens if I Stop Paying my Consumer Proposal?

If your Consumer Proposal calls for monthly payments and you miss three payments, or if your payment schedule is less frequent and your last payment is over three months late then your Consumer Proposal will be deemed annulled.

• Your Consumer Proposal’s annulment means that your creditors will be able to resume collecting the money you owe them, less whatever amount they may have already received through the proposal.
• A Consumer Proposal can be “revived” under certain conditions, or you could instead choose to declare bankruptcy if you are unable to repay the original debts once your creditors’ rights to collect upon the debt resume.

Should you become concerned about your ability to maintain your Consumer Proposal terms at any point, speak with your Licensed Insolvency Trustee as soon as possible. We want to ensure you can move forward successfully with a debt-free plan that is affordable for your unique situation.

Learn About Consumer Proposal Pros and Cons Compared to Bankruptcy

How Long Does a Consumer Proposal Take to Finish?

Consumer Proposals are a great non-borrowing consolidation tool for a range of situations, and because every Consumer Proposal is tailored uniquely to each person’s situation they can last for varying lengths of time:

• If you are making a lump sum payment, your Consumer Proposal could take as little as a few months from official start to finish, including the time needed for your creditors to approve your proposal and financial counselling sessions to be completed.
• The maximum length of time for a Consumer Proposal term is 60 months.
• You can make extra payments on your Consumer Proposal and pay it off early at any time with no penalty.

Even though your debt payments and interest charges were previously frozen, receiving your Certificate of Full Performance is what triggers the unpaid balance of the debts included in your Consumer Proposal to be legally written-off/forgiven by your creditors forever.

Consumer Proposal Impact on Credit History

Your Consumer Proposal will be noted on your credit history for three years following completion or six years from the date your proposal officially started, whichever is soonest. You can apply for new credit and build up your credit history and score at any time, you do not need to wait for the three-year window to pass.

For many people this relatively short-term impact allows them to become debt-free and achieve a strong credit rating in far less time and at a much lower cost than if they had tried to pay the original debts plus ongoing interest on their own without the benefits of their Consumer Proposal.

Find out if a Consumer Proposal could be right for you – connect with a BC Licensed Insolvency Trustee today, book your confidential free debt consultation now.

The post What Happens After Filing a Consumer Proposal appeared first on Sands & Associates.

As Licensed Insolvency Trustees we often help individuals in BC who have either recently finished school and are looking for advice on how to manage student debt, as well as individuals who have been struggling to deal with student loans for some time. Read on for general tips to help you pay off your student debts, as well as an overview of legal options for Canadians to consolidate and write-off student loans and other debts.

Tips for Repaying Student Debt

If you’ve recently finished your post-secondary studies or are preparing to start a post-secondary area of study, consider these strategies to help you manage your student debt repayments, now and later:

• Make a budget. Before committing to student loans (or any other type of debt), map out how much money you’ll really need.
  • Factor in tuition, books, rent, groceries and any other costs of living.
  • Consider whether you can earn some of these funds through a part-time or summer job and have a back-up plan for emergencies or a deficit in what student loans may extend to you.
  • If you’re granted more than you think you need, don’t be tempted to spend it all – avoid taking on more debt than necessary!
• Use all the resources available to you. Extra resources can add up to great savings later, so be sure to explore all the potential benefits and sources of assistance.
  • Do you have an RESP?
  • Are there grants, scholarships or bursaries you can apply for?
  • Will your parents be contributing to your education or costs (or housing you in general)?
• Build a post-grad plan. Know your loans, grace periods and payment due dates.
  • Keep in touch with your lenders if you move or your contact information changes.
  • Figure out a realistic plan to pay down your debts and avoid relying on more credit.
• Know when to ask for help – whether or not your payments are behind.
  • If your income is falling short of allowing you to make your student loan payments and you’re concerned your payments are going to fall behind, contact a student financial assistance office. The government has procedures in place that may be able to provide some student loan relief for you, such as reducing your monthly payment.
  • If you need more than temporary relief, connect with a Licensed Insolvency Trustee as soon as possible. They are the only debt help professional endorsed by the Canadian government to help you manage your debts – including student loans.

Legal Options to Deal with Student Loans in Canada

Contrary to what many people may believe, in BC (as well as the rest of Canada) there are two options that allow you to have student loans forgiven. Both solutions are only available by working with a Licensed Insolvency Trustee and can also be used to stop collection actions, including wage garnishments from Canada Revenue Agency collecting on student loans.

Consolidate Student Loans in a Consumer Proposal

A Consumer Proposal may be a suitable option for debt relief and a financial fresh start if you want to consolidate your student loans with other debts and have the financial ability to make some repayment towards the overall balance of your total debts.

Consumer Proposals are a unique type of legal debt consolidation that allow a person to consolidate virtually all their debts (such as student loans with credit card debt and other common debts) into one settlement offer, reducing the amount you need to repay, with the unpaid portion of your overall debt and accumulated interest being forgiven by your creditors.

• Most people will repay only a portion of their total debt, in full settlement – ranges of debt repayment of 30-70% of the total balance are common, with the remainder being forgiven or “written off” by the lender.
• Consumer Proposal offers are tailored to your specific situation and can last for as little as a few months, but cannot extend past 5 years.
• Consumer Proposals require no borrowing and there are no added interest charges or costs to be paid by you.

Compare Consolidation Options with our Debt Options Calculator

Discharge Student Loans in Bankruptcy

A personal bankruptcy can be used to discharge (write-off) student loans, as well as to get debt forgiveness from other common debts such as credit cards, overdrafts, lines of credit, payday loans and more. Not only is bankruptcy quite a private and unobtrusive process – for most people, personal bankruptcy in BC generally:

• Lasts for 9 months.
• Allows you to keep virtually all your assets.
• Costs as little as $2,700, paid through manageable monthly payments with a Licensed Insolvency Trustee.

Types of Student Loan Debt in Canada

In Canada there are 3 main types of student loans available:

• Federal student loans
• Provincial student loans
• Private student loans
  • In addition to bank-funded student loans, many major financial institutions will also offer specialized lines of credit and student credit card products.

Regardless of which type of student loan you have, a Licensed Insolvency Trustee can help you manage these student debts. Private (bank-funded) student loans will be treated as any other consumer debt (like a credit card), with no special exception. Government student loans may also be treated the same way, depending on when your studies ended.

Timing for Student Loan Debt Forgiveness in Canada

A key factor in dealing with government student loans is how long it has been since your studies ended:

• If it has been 7 years or more since you finished school, both a Consumer Proposal or a bankruptcy can eliminate in full your unpaid student loans, as well as accumulated interest.
• If it has been less than 7 years since you went to school and you are starting a Consumer Proposal or bankruptcy, you will still include your student loans in either process, but the unpaid amounts will ‘survive’ and need to be repaid after your Consumer Proposal or bankruptcy has been completed.
• If it has been more than 5 years but less than 7 since you last attended school and started bankruptcy or a Consumer Proposal, the court may grant an order that would discharge your otherwise remaining student loans under a special financial hardship clause.

Even if your Consumer Proposal or personal bankruptcy does not completely write-off your government student loans, dealing with other debts you have (such as credit cards, lines of credit, etc.) can greatly improve your budget and allow you to be in a better position to repay any surviving student loans.

A Licensed Insolvency Trustee will help you determine what amounts, if any, would survive your Consumer Proposal or bankruptcy before you commit to a process and will help you weigh the pros and cons of all debt options available to you. We believe that making informed decisions about available debt management strategies is key to our clients moving forward with success and from a position of confidence.

For more information on options for student and government debts, consumer debts and business debts, book your free debt consultation with a local Sands & Associates debt help professional today.

The post What to do When You Can’t Pay a Student Loan in Canada appeared first on Sands & Associates.

What is Credit Counselling? Who offers Credit Counselling? 

Credit counselling programs consolidate your basic consumer debts into a settlement plan which is offered to your creditors. You then repay your debts through the debt settlement plan, which is facilitated by a credit counsellor. While your debt settlement plan payments are in good standing your creditors with debts under the plan will generally stop contacting you. 

Credit counsellors are often trained as Accredited Financial Counsellors, but there is no law in place that requires them to have any specific types of formal training or education. There is no legal requirement for anyone to call themselves a ‘Credit Counsellor’, so it’s important that consumers conduct due diligence on the specific qualifications of the counsellor.

Although credit counselling services may be offered by both for-profit and not-for-profit companies, neither are regulated under a government authority as a professional debt service, even if they may operate as a registered charity.  

What is a Consumer Proposal? Who offers Consumer Proposals?

A Consumer Proposal is an alternative to traditional debt consolidation that works to consolidate your debts, stop all future interest and finance charges, and cut the amount you have to pay back, with your creditors agreeing to write-off a significant portion of the debts. A Consumer Proposal will provide automatic protection from your creditors, they will be prohibited by law from charging interest, asking you for payment or continuing any collection action or garnishments.

In Canada only a Licensed Insolvency Trustee “LIT” (formerly called a Trustee in Bankruptcy) can file a Consumer Proposal for you (you also aren’t able to make a Consumer Proposal on your own). LITs are the only debt professionals authorized and endorsed by the Canadian government to provide legal debt solutions that can serve to forgive virtually all types of debts. 

What Debts can be Consolidated Using Credit Counselling and Consumer Proposals?  

Both credit counselling and Consumer Proposals can be used to deal with general consumer debts, including debt from: credit cards, lines of credit, bank overdrafts, a mortgage shortfall, old utility bills or payday loans.

If you have government debts, you need to be aware that a Consumer Proposal (or bankruptcy) will be the only methods of debt forgiveness accepted for debts such as:

• Canada Revenue Agency balances for income tax, GST, or payroll debt;
• EI debts;
• Student loans (Provincial or Federal);
• MSP debt;
• ICBC debt.

When you propose a debt settlement offer to your creditors through a Consumer Proposal only 50% (by dollar value) need to agree to your offer in order to legally bind ALL of them, whereas with a credit counselling program any creditors who do not agree to participate in the plan will need to be paid separately, in addition to the payments you’re making to the credit counsellor.

How Much Debt Do I Pay Back in a Credit Counselling Program or a Consumer Proposal? Are There Extra Costs Charged? 

Debt Repaid in Credit Counselling:

With credit counselling settlements you will be required to repay 100% of all your debt.

• Your monthly payments may be primarily based on the amount of debt you owe and time in which you need to have it paid off (up to 5 years generally).
• Creditors may agree to stop charging you interest, or to charge it at a lower rate – but there is no guarantee of this.
• Various creditors could choose not to participate in the plan and require their debts to be paid separately with full interest charges and the potential for legal action against you.

Example: $20,000 in debt repaid with a credit counselling debt settlement plan over 5 years, with no interest = payments of approx. $333 per month (plus credit counsellor’s fees)

Cost for Credit Counselling:

Credit counsellors (both for and non-profit) may charge you consulting and monitoring fees and levies for their services, on top of what you repay to your creditors under the debt repayment program. There are no regulations or dispute mechanisms in place for these professional service fees.

Debt Repaid in Consumer Proposal:

Consumer Proposals serve to consolidate debts and cut how much debt you must repay, in full settlement; it’s not uncommon for debts to be reduced by up to 50-80%.

• Debts automatically stop accruing interest charges.
  • Because you’re repaying just a portion of the debt without interest, the monthly payments a person makes in a Consumer Proposal are often drastically lower than those of a credit counselling plan or bank consolidation loan.
• Your income and family size are taken into account when the proposed settlement is being considered – a Licensed Insolvency Trustee is required to sign off that the proposal can fit within the household budget without causing undue hardship.

Example: $20,000 debt settled for 30% repayment with a Consumer Proposal over 3 years = payments of approx. $167 per month (no fees or interest are charged)

Cost for Consumer Proposal:

Licensed Insolvency Trustee fees in a Consumer Proposal are set by government tariff. These fees are deducted from the funds the creditors receive and there is no additional cost to the person above what they are offering to their creditors in the Consumer Proposal.

Most people will just make a first monthly proposal payment at the time they sign their official documents – no extra payments are required to start a Consumer Proposal.

Try our Online Debt Options Calculator to see more payment scenario comparisons!

How Long Does It Take to Finish a Credit Counselling Program or Consumer Proposal? What is the Impact of these Types of Debt Consolidation on my Credit History?

Credit counselling and Consumer Proposals do have some similarities when it comes to the length of time you may use to complete your debt settlement, and their impact on your credit history.

• Both can take a maximum of 5 years to complete (although they could be shorter in duration too).
• The impact to your credit rating will be comparable in either option:
  • A credit counselling program will be reflected on a person’s credit history for two years following completion.
  • A Consumer Proposal will be reflected on credit history for three years following completion or six years from the date of filing, whichever comes first.
  • It’s important to know that this does not prevent you from seeking new credit before the notation expires from your credit history report.

Any time your debts are not paid in full per the original lending terms your credit history will take a temporary hit. The key piece to remember is that credit reports and scores are temporary – they can change drastically in a short amount of time.

Need a quick re-cap? View an infographic comparison of Consumer Proposals VS Credit Counselling

It’s important to be sure you’re turning to the right professional when you have questions about how to deal with debt, or to understand your legal rights and remedies. A Licensed Insolvency Trustee can walk you through all of your options including debt consolidation, credit counselling programs, Consumer Proposals and personal bankruptcy.

Book your free confidential debt consultation with a friendly local Sands & Associates representative today. In an hour or less you can get all the information you need to find your best debt solution!

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From bank loans to Consumer Proposals, in Canada there are several different ways a person can choose to consolidate their debt. While consolidation options can vary greatly, before signing on to any debt consolidation program there are a number of very key questions that you should ask. It’s important to be able to advocate for yourself and gain awareness of your own rights and remedies – after all, knowing is not owing!

Learn about the 5 key questions to ensure a debt consolidation plan is right for you – before you sign:

1. Who Are You Working With?

Not all debt help professionals are created equal! Consumers need to be aware that there are many so-called ‘grey areas’ in the regulation of debt help. Find out the credentials and professional capacity of your debt management specialist to understand which areas of law and regulation will be on your side. For example:

• Banks & Credit Unions: The Financial Consumer Agency of Canada ensures compliance with consumer protection laws;
• Debt Repayment Agents (Debt Poolers): Overseen by Consumer Protection BC since 2016;
• Credit Counsellors: Some may be accredited by a national association, but no regulatory body exists;
• Licensed Insolvency Trustees: Regulated, overseen and licensed by the Office of the Superintendent of Bankruptcy (part of the Federal Government).

Did you know? The Government of Canada officially endorses only one debt professional to assist individuals in dealing with too much debt – a Licensed Insolvency Trustee. 

1. What Debts are Being Consolidated?

You may have several different types of debts you want to deal with, be sure to confirm which ones you will be able to consolidate. For example, if you owe money for certain types of debts, as outlined below, only a Licensed Insolvency Trustee will be able to assist:

• Government debt such as income tax or GST balances;
• Student loans;
• A leased vehicle you no longer want to maintain.

Did you know? A Consumer Proposal allows you to write-off a portion of your consolidated debts. You may be able to settle your debts in full by paying as little as 20% of the overall debt, with no additional interest charges or costs of administration.

1. How Much Will it Cost You?

Interest rates and required fees can have a huge impact on how much you will wind up paying back. Be sure read to read the fine print and pay special attention to:

• Comparing the interest rate offered to the ones on your current debts (yes, sometimes the consolidation rate is higher!);
• Costs if you miss or postpone a payment;
• Any administrative or registration charges;
• Any Professional services fees being charged.

Did you know? In a Consumer Proposal, Licensed Insolvency Trustee fees are paid from the money your creditors receive, so there is no extra cost to you beyond what you’re offering to repay to your creditors.

1. What Else is in the Fine Print?

Ask about any other conditions that come with your consolidation agreement. Common requirements may include:

• Needing a cosigner or asset to pledge as security against a bank loan;
• Keeping your tax returns filed (and paid) up-to-date;
• Participating in financial counselling sessions.

Remember that your needs are key! If you need to stop a wage garnishment or write-off some of your debt in order to make things manageable, a Consumer Proposal could be a better consolidation choice than a bank loan.

1. Is There an Exit Option?

Unforeseen circumstances can and do occur – find out what may happen if you can no longer maintain the consolidation agreement. This can vary greatly depending on the type of consolidation. Some examples may include:

• Collection action and co-signer being forced to pay (bank loan);
• Loss of an asset (bank loan);
• Needing to repay the original debts.

Quick Tip! Be proactive and seek professional debt advice early on – the right advice can save you a lot of time, stress, and money. 

Be sure to ask any and all questions you have before signing official documents. If you’re working with a reputable professional they should be more than willing to take the time to address any concerns you have, and you should never feel pressured. Trust your instincts!

Get debt help from a friendly non-judgmental professional today – book your free confidential debt consultation with Sands & Associates. Local offices throughout BC!

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