• 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.

• Virtually all your debts can be included in a Consumer Proposal, everything from credit cards to payday loans, outstanding taxes to student loans and more.
• Typically creditors will agree to accept repayment of 20-50% of your balance to consider the debt fully settled, and interest charges are automatically frozen.
• You’ll have up to five years to pay off the agreed amount of debt, usually via monthly payments.
  • For example, if you owe debts totalling $25,000 you might offer to pay $210 a month for three years (36 months), repaying a total of around $7,500 to cut your debt by 70%. The balance of the debt is legally eliminated at the end of the Proposal.

Filing a Consumer Proposal can be a great way to streamline your debt repayment, and despite being a legal solution, the process is generally straightforward. Read on to learn details around how a Consumer Proposal works, and some of the ways a Consumer Proposal does and doesn’t impact you.

Key Ways a Consumer Proposal Will Affect You 

A Consumer Proposal Provides Protection from Creditors

When your Consumer Proposal is filed it acts as a shield to protect you and your assets from your creditors. This Consumer Proposal effect is an especially welcome relief to anyone worried about overdue payments or outstanding accounts since a Consumer Proposal will:

• Stop creditors from contacting you for money, and stop all collection activities that may have been happening.
• Halt legal action creditors may have been taking against you.
• Immediately remove wage garnishments or account freezes (even from the government).

A Consumer Proposal Restructures Your Debt Payments

Because a Consumer Proposal will consolidate (and cut) virtually all your debts, rather than juggling multiple accounts and payments, you’ll have one simple (usually monthly) payment to make to your Licensed Insolvency Trustee.

• Since your debt may be cut by up to 50-80% with no interest charges or added fees, Consumer Proposals usually save people paying off debt a considerable amount of money and time.
• Most people opt to handle payments for ‘secured debts’ that are in good standing outside their Consumer Proposal, so normally a Consumer Proposal won’t include secured debt agreements you’ve decided to continue paying, such as your mortgage or vehicle financing.
  • Many clients find themselves in a much better position to continue to make payments on their home mortgage or car loan after they have significantly reduced their other consumer debts through a Consumer Proposal.

Book Your Free Consultation

A Consumer Proposal Temporarily Affects Your Credit Rating

Like other types of debt consolidation or settlement, filing a Consumer Proposal does temporarily reduce your credit score. Here’s what you should know:

• Your Consumer Proposal will be noted on your credit history for three years after the debts included in your Proposal are paid off – or – for six years from the date your Proposal started, whichever is soonest. This is often considerably less time than it would take you to pay off your debt on your own.
• You can seek new credit any time, even while your Proposal is active, and most people are able to get basic things like a credit card shortly after filing their Proposal.
  • Secured or prepaid cards can also be good alternatives to have the convenience of a credit card but enjoy the break from debt accounts.
    • Keep in mind that a secured card, rather than a prepaid card, will normally provide updates to credit bureaus to help you rebuild your credit after filing the Consumer Proposal.
  • If your mortgage comes up for renewal during your Consumer Proposal this shouldn’t be an issue, provided it is paid up to date.

Many people worry about whether consolidating their debt with a Consumer Proposal will have a long-term (or even permanent) impact on their credit score, but the reality is that the effect is generally far less severe than they fear, and for most people the benefits far outweigh the temporary inconvenience.

• It’s also important to know that despite a ‘good’ credit score, many people dealing with a debt problem can’t get help from their bank to deal with their debt, notwithstanding that they may have a high credit score and are not missing payments.

Key Ways a Consumer Proposal Will Not Affect You 

A Consumer Proposal Doesn’t Make Your Spouse Pay Your Debt

Filing a Consumer Proposal should not affect your spouse in any way unless they have co-signed or guaranteed debt together with you.

• Having a spouse or common-law partner does not on its own trigger a shared liability with the other spouse/partner, nor does it give your creditors recourse to ask them for payments, nor mean they must do a Consumer Proposal too.
• Unless you’ve given your creditor means to collect from both of you by taking on joint debt or triggered a division of “family debts” by separating or divorcing, your spouse isn’t responsible for repaying your debt.
• Your financial responsibilities are in fact so separate that where there is no co-signer, guarantor, or co-cardholder, it is possible for one spouse to file a Consumer Proposal without the other one being aware, as typically only creditors are notified of your Proposal.

Book Your Free Consultation

A Consumer Proposal Doesn’t Affect Your Employment

For most people a Consumer Proposal in no way affects their job and you can change jobs or switch careers at any point.

• Overall, the Consumer Proposal process is very private and in normal circumstances your employer is not notified about your Proposal unless your wages are being seized – this is because your Licensed Insolvency Trustee will contact your payroll department to halt the garnishment when your Proposal starts.
• If you still need reassurance that a Consumer Proposal won’t impact your employment, know that the federal Bankruptcy and Insolvency Act, which governs Consumer Proposals, specifically states “No employer shall dismiss, suspend, lay off or otherwise discipline a consumer debtor on the sole ground that a consumer proposal has been filed in respect of that consumer debtor.” (S. 66.36)
• Also, for business owners – you can be self-employed during a Consumer Proposal, including being the director of a corporation.

A Consumer Proposal Doesn’t Take Away Your Tax Refunds

A Consumer Proposal doesn’t impact how you file your tax returns or cause you to ‘lose’ your tax refund or other tax credits you may be eligible for, even if you included a prior income tax (and/or business GST) balance owing to Canada Revenue Agency in your Consumer Proposal.

• While your Consumer Proposal is active you’ll need to ensure your tax returns are filed up to date and that any balances owing from these new returns are paid.
• If you regularly owe money to Canada Revenue Agency a clause may be added to your Proposal that allows you to include the exact amount you owe for income taxes up to the date you start your Consumer Proposal, even if that tax return isn’t yet due.

Book Your Free Consultation

A Consumer Proposal Doesn’t Prevent Immigration Sponsorship 

If you have a Consumer Proposal you can still apply to sponsor someone to immigrate to Canada, bearing in mind that you should always refer to the Government of Canada for the latest rules and guidelines. This is an important distinction between Consumer Proposals and bankruptcy, as a person who has not yet been discharged from bankruptcy will need to wait until their bankruptcy is finished before making an application to sponsor immigration to Canada.

• Neither a Consumer Proposal nor bankruptcy prevent you from applying for citizenship in Canada, nor from leaving the country (for vacation or permanent relocation) – just be sure to keep your Trustee informed as to your address if you move before your Proposal or bankruptcy are complete.

Is a Consumer Proposal a Good Solution for Me? 

For people who owe debt totalling less than $250,000 (excluding their mortgage), and want to make their debt payments more manageable, a Consumer Proposal is one of the best debt consolidation options available.

If you’ve been wondering about a Consumer Proposal but worried about navigating any aspects of the process, be sure to talk with a Licensed Insolvency Trustee about your concerns. It’s vital that you have all the facts about how to deal with your debt and the opportunity to explore all your options together with a qualified professional.

• A Consumer Proposal can only be filed by working with a Licensed Insolvency Trustee. We are Canada’s only official debt help professionals and Licensed Insolvency Trustees alone are qualified and endorsed to help you make a Consumer Proposal.
• Consumer Proposals are a unique debt solution – they are not the same as bankruptcy, nor are they the same as credit counselling or other types of informal debt settlement plans.
• If you’ve been advised against a Consumer Proposal by anyone besides a Licensed Insolvency Trustee, it is recommended you contact a Licensed Insolvency Trustee for a second opinion.

You can connect directly with a Licensed Insolvency Trustee local to your province and ask to have a free, confidential consultation to talk about your situation and options.

• Sands & Associates serves all of BC and our Licensed Insolvency Trustees and Insolvency Estate Managers are available to talk with you seven days a week. In just half an hour we can help you better understand your situation and choose the debt-free plan that’s right for you.
• You’re welcome to talk with us confidentially over the phone, by online video, or in person at a local office near you – whatever you find most comfortable and convenient.

You are not alone in finding a way to move forward – we’re here for you with support and solutions.

Talk with a local Sands & Associates Licensed Insolvency Trustee today and find your best debt solution.

Book Your Free Consultation

The post How Does a Consumer Proposal Affect You? appeared first on Sands & Associates.

Read on to learn how consolidating and cutting debt with a Consumer Proposal, or having debt forgiven through personal bankruptcy, impacts your personal tax filings, tax debt, refunds, and more.

How Does a Consumer Proposal Work? 

A Consumer Proposal is a special type of consolidation solution that allows you to manage virtually all your debts in one streamlined payment and cut how much debt you must repay to have your debts cleared.

• Your consolidated debts are reduced to what you can reasonably afford to repay over a period up to five years, and you may repay as little as 20-50% of your total debts to settle them in full – without any interest or added fees.
• Virtually all types of debts can be consolidated and cut in a Consumer Proposal, and you have the option to exclude certain debts such as a vehicle loan or mortgage.

Your Licensed Insolvency Trustee will fully coordinate your Consumer Proposal, taking on all communications with your creditors, facilitating your payments, and providing you with support throughout the process.

• Two private one-on-one financial counselling sessions will be conducted with you, giving you resources and tools to help you improve your finances moving forward.
• You will generally have few duties to complete besides making whatever payments you are offering to your creditors and keeping your taxes filed and paid up to date.

There are many advantages to filing a Consumer Proposal, which will allow you to avoid bankruptcy AND the cost of borrowing while you get your debts paid off for good, plus provide you with full protection from your creditors.

What Happens in a Personal Bankruptcy?

Personal bankruptcy is a legal debt forgiveness option that can allow you to have up to 100% of your debts totally forgiven, and protects you from ongoing creditor harassment, collections, legal actions, etc. The bankruptcy process in Canada is generally very straightforward and private.

• Once you file for bankruptcy your debts are frozen and your creditors are immediately prohibited from contacting you for payment or charging interest on your balances.
• The cost of bankruptcy is generally minimal compared to repaying all your debts in full (with interest), and there is no cap on how much debt can be forgiven.

Most people will retain all their assets and be “in bankruptcy” for only nine months and, in this time, you’ll work to complete a few key duties that will allow you to exit bankruptcy and consider your debts cleared:

• Have two private, one-on-one financial counselling sessions with a qualified counsellor who works with your Licensed Insolvency Trustee.
• Keep a monthly budget of your household income and living expenses.
• Provide your Trustee the information necessary to file your income tax return for the year of your bankruptcy.

Learn More About Financial and Credit Counselling with a Qualified Insolvency Counsellor

Does a Consumer Proposal Clear Tax Debt?

Yes! Consumer Proposals and personal bankruptcy are the only two options in Canada that can be used to settle or forgive government debts for less than the total balance owing. Both a Consumer Proposal and personal bankruptcy can include:

• Basic consumer accounts such as credit cards, payday loans, lines of credit, overdrafts, etc.
• Government balances including tax debt, business GST, CERB overpayment, federal and provincial student loans (private lender student loans can also be included).
• Outstanding MSP premiums, EI overpayments.
• Debts for a business that you’ve signed a personal guarantee for.
• An amount owing to an individual.
• Secured debts where the ongoing payments have been halted (such as a vehicle shortfall or mortgage foreclosure).
  • If you want to continue with your vehicle financing or mortgage, then your Consumer Proposal or bankruptcy could exclude these debts.

If you owe a government debt a Licensed Insolvency Trustee will often consider this a high priority debt, as Canada Revenue Agency collects on behalf of many of accounts and has more power than virtually any other type of creditor when it comes to collecting on an outstanding balance.

• Many people end up in incredibly stressful situations almost overnight because Canada Revenue Agency has taken steps such as freezing their bank account, garnishing their wages, or placing a lien on their property.

If you have a government (or other) debt that you cannot pay, or that you need help in managing, the best thing to do is reach out to a Licensed Insolvency Trustee local to your province right away. Staying ahead of the problem can save you a lot of stress – and money!

Read an Overview of Wage Garnishment in BC

How Does a Consumer Proposal or Bankruptcy Impact Tax Refunds? 

Although Consumer Proposals and bankruptcy have several things in common, they are quite different solutions and some of these distinctions are in how tax filings and refunds are handled.

Tax Returns and Refunds in Consumer Proposals

If you owe Canada Revenue Agency for a tax (or business GST) balance, you’ll need to ensure all your tax filings have been submitted before you make your Consumer Proposal. Your Licensed Insolvency Trustee can advise you on what to file if you are behind.

• If you typically owe money on your tax returns your Trustee may additionally recommend including a clause in your Consumer Proposal that allows you to include the exact amount of tax debt you’ll have, calculated to the day your Consumer Proposal starts – even if that return isn’t yet due. This allows you to consolidate and cut the most debt possible.
  • For example, if you start your Consumer Proposal July 5^th, you could include debt from a provisional tax return that covers your taxes from January 1 to July 5.
  • A second return would later be filed to cover from the date of your Proposal to December 31, separating the pre- and post-Proposal balances.

If you don’t have any tax debt and your returns are filed up to date when you start your Consumer Proposal, you’ll continue to file your tax returns yourself, paying any balances due and keeping any refunds ‘as usual’.

• For people who typically get a tax refund (especially one you rely on for paying annual or semi-annual expenses) this is another consideration that can make a Consumer Proposal a better option than bankruptcy.
• It’s also not uncommon for people to use their tax refunds towards making an additional payment on their Consumer Proposal, with a goal of having it paid off early.

It’s important to stay on top of your tax requirements (filing and paying) while your Consumer Proposal is in place.

Consolidating Debt with a Consumer Proposal: Step-by-Step

Tax Returns and Refunds in Bankruptcy

Two tax returns will be filed for you by your Licensed Insolvency Trustee for the year that you declare bankruptcy, called pre- and post-bankruptcy tax returns. All you need to do is supply the required information to get these returns filed.

• The pre-bankruptcy return will cover the period from January 1 to the date you file for bankruptcy, and any balance owing from this return will be eliminated in your bankruptcy, along with any other balance from prior tax years.
• The post-bankruptcy return will cover the period from the date your bankruptcy started to December 31, and any balance owing from this post-bankruptcy return will be considered a new debt outside of your bankruptcy and therefore your responsibility to pay.

If there are any refunds from these pre- and post-bankruptcy tax returns (or any prior years’ returns that are filed at the time you start bankruptcy), these will be included in your bankruptcy ‘estate’ and go towards any money collected that could be distributed to your creditors as a dividend.

Subsequent years’ tax returns and balances are yours to file, pay, or collect.

Learn More About What to Expect Working with a Licensed Insolvency Trustee 

Learn More About Your Debt Options, Including Consumer Proposals and Bankruptcy

Licensed Insolvency Trustees are the best debt help resource for individuals, and the only professionals in Canada fully qualified and authorized to help you with your debt. You may be able to address your financial difficulties using the resources we can advise you on, a self-directed approach, or a legal solution like a Consumer Proposal or bankruptcy.

• Anyone can have a free confidential consultation to talk about their needs and get a plan to become debt-free – your finances do not need to be in an urgent state to qualify for help.
• By connecting with a Licensed Insolvency Trustee local to your province, you can safely get accurate advice and guidance.

The best time to confront a debt problem is in the early stages, as the issues often get worse if you don’t take action. Avoid the temptation to wait it out – you owe it to yourself to get debt help.

• Sands & Associates helps consumers across BC and we can review your financial situation together and provide you with information on a full range of options to deal with your debt.
• There is no cost for a consultation, and you are under no obligation to continue working with a Licensed Insolvency Trustee – and in less than an hour you will have clear understanding about the next steps in whatever solution you choose.

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 today.

The post What Happens to my Tax Filings if I Make a Consumer Proposal or File Bankruptcy? 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.

Watch the clip here, and read more below:

Potentially Risky Consumer Debts

Although these two common types of credit can offer a short-term benefit, use caution when taking on these debts, where payments can easily become unmanageable:

Long-Term Vehicle Financing: Many people finance a vehicle, which is not necessarily a problem – but financing terms are now longer than ever. Even though committing to a five, seven, or even eight-year financing term is becoming more common, consider the risks of doing so:

• Making an unaffordable vehicle ‘affordable’ by stretching out payments over a longer term.
• Investing in an asset that will rapidly depreciate (the exact opposite of a mortgage, where your investment is expected to increase in value).
• Extended car payments can take up a big portion of your household income that could be used for savings, retirement, or even paying off other debts.

Credit Card Balances: Your credit has already been used and now you’re committed to the payments – and the worst part about credit card debt – the high interest that accumulates on often long forgotten purchases.

• If you’re not able to pay your balance in full each month it’s easy for credit card debt to add up over time, and this often happens through frequently overspending, sometimes as a direct result of having insufficient income to meet both your household costs AND debt payments.
• The ‘borrow-repay-borrow’ cycle can be almost impossible to break.
• With an interest rate of 24% (a mid-level rate for most bank and department store cards) your debt will double every three years!
• Making only minimum monthly payments (or slightly more than) means even a relatively small balance can take years to pay off. For example, a $6,000 debt could take 40 years+ to pay off making only your minimum monthly payments and you would pay several times more in interest charges than the actual amount that you originally borrowed.

Compare Monthly Payments with Our Debt Options Calculator

Most Risky Consumer Debts

These types of debts can point to an urgent debt problem, either present – or waiting to reveal itself:

Payday or ‘Fast Cash’ Loans: Payday loans are usually a ‘last resort’ type of debt used to meet daily living expenses in a hurry. Because the borrowing fees and interest charges on payday loans are extremely high, using payday loans or ‘fast cash’ advances creates a major risk of kicking off a borrowing cycle that can be even more difficult than credit cards.

• This type of borrowing often leads to people carrying multiple payday loans. It’s not uncommon for people to become trapped in a cycle of payday loans, to have up to a dozen different loans outstanding at the same time.

Canada Revenue Agency Debts: Whether an unpaid balance for income taxes, business GST, or CERB overpayment – an outstanding government debt is not to be taken lightly.

• The government has powerful collection actions at their disposal, and, unlike many other creditors, Canada Revenue Agency can start collection action virtually overnight. You may not learn of pending action until it is already in place, including wage garnishment/seizure, a bank account freeze, or a lien placed on your property.

If you find yourself unable to repay your government debt, or in a situation where collection action is escalating, talk with a Licensed Insolvency Trustee as soon as possible.

Learn More About Solutions for Having Government Debts Forgiven

Consumer Debts to Be Cautious Of

There are two additional types of consumer debt to be cautious of, particularly when it comes to trying to manage debt you already have:

Co-Signing Debt: As Licensed Insolvency Trustees we’re regularly asked when it would be advisable to co-sign a debt for someone else – our answer: almost never!

• Co-signed debts are not a 50/50 liability as many people believe – each person on the account is responsible for 100% of the unpaid debt if the other person does not pay.
• Getting a co-signer when you’re already struggling financially often just introduces additional layers of stress and emotional responsibility – you’ve now given that creditor another responsible party to pursue for payment.
• Conversely, if you’re considering co-signing for someone else, understand that you are potentially letting someone else impact your monthly financial commitments and credit rating.

Read More About Co-Signing Debts

Using Assets as Collateral: Particularly if you are seeking to consolidate debt by borrowing, lenders may require you to pledge to them security over an asset to get a loan.

• Like co-signing, in the event you are unable to meet your repayment terms, your creditor now has additional recourse to collect upon the debt, which could include seizing and forcing the sale of the pledged asset.
• Be especially careful before taking on additional charges against your home equity – you only have so much to borrow against, not to mention potentially leaving yourself vulnerable to an interest rate increase or downturn in the housing market.

Learn More About Options to Consolidate Your Debt

Where to Get Debt Help in BC

If you have concerns about any of your debts or are considering what you can do to manage your debt, reach out to a local Licensed Insolvency Trustee in your province. You can safely get confidential support from a qualified and unbiased professional by contacting a Licensed Insolvency Trustee for a free debt consultation.

Sands & Associates’ team of debt help experts work with people across British Columbia and our full suite of debt help services is available in person from local offices around the province, over the phone, or online – whatever is most comfortable and convenient for you.

Your debt-free future IS possible and may be closer than you think. Connect with a caring, non-judgmental Licensed Insolvency Trustee today – book your free, confidential consultation now.

The post Risky Consumer Debts – and What to Watch For appeared first on Sands & Associates.

President of Sands & Associates and BC Licensed Insolvency Trustee Blair Mantin joined Global News BC to address some frequently asked questions about managing debt and share information consumers should know when dealing with some common types of personal debt.

Watch the clip here, and read on to learn the answers to some common personal debt questions, with debt expert insights to help you meet your debt-free goals:

Frequently Asked Questions About Personal Debt 

Every day Licensed Insolvency Trustees connect with people seeking information about debt who may be facing a variety of financial challenges and concerns – from urgent situations with wage garnishments, to looking for ways to streamline debts and make monthly payments more affordable. Here are answers to questions that are among the most common:

“Am I responsible for my spouse’s debt?”

The short answer is – no! You’re not personally responsible for repaying the debts of your spouse or partner simply by being related, married, living together or even their death. It is a common misconception, but rather than through marriage, responsibility for ‘spousal debt’ may be triggered by:

• Debts being deemed as ‘family debt’ under BC’s Family Law Act following separation or divorce, or
• Co-signing or co-borrowing on debts together.

This conversation often leads to an insight that many Licensed Insolvency Trustees wish was better understood by people: Co-signing debt with anyone is usually riskier than you think – so much so that we almost never recommend it.

• Besides adding layers of emotional stress to your finances, by co-signing or co-borrowing with someone (related or not), you become equally responsible for paying back 100% – not half, of the full balance due if the other party does not pay.

What You Should Know About Co-Signing Debts – Learn More

“Do unpaid debts expire eventually?”

In BC there is a Limitation Act, under which the length of time a creditor has to sue you for a debt owing is capped with a two-year basic liability limitation period. You technically will owe the debt, and creditors can continue to call you or report delinquent accounts to credit bureaus for some years to come, but the creditor cannot take legal action against you if it’s been two years since:

• The date the unsecured debt was incurred; or
• The date of your last payment on the debt; or
• The last written acknowledgement of the debt by the person who owes the money (yes, emails count).

It’s important to know certain things can ‘reset’ the clock, and there are exceptions; judgments, child support and debts owed to government bodies are examples of debts not covered.

But – there is another fact people often don’t (but should!) know about debt: There are options to restructure and get forgiveness for government debts – including Canada Revenue Agency balances for taxes, business GST, federal and provincial student loans, CERB overpayment, ICBC debts and more.

• Canada has two solutions for relief and even 100% forgiveness of consumer and government debts: a Consumer Proposal (a legal non-borrowing debt consolidation option) or personal bankruptcy.
• These also stop Canada Revenue Agency from wage garnishments, account freezes and putting a lien on your property.

Debt Solutions for Having Government Debts Forgiven – Learn More

“What can I do to deal with my debt without impacting my credit score?”

Virtually every debt strategy can have some effect to your credit history and score, but simply carrying a bunch of debt can affect your credit score too. Any time you don’t pay your debts off in full in a timely way and according to the original lending agreement, your credit history may be impacted. For example:

• Making only minimum monthly payments on your credit card will keep it up to date (good of course), but it takes a long time to clear debt this way and depending on your balance this could cause you to have a score continually impacted by a high credit utilization rate.
• New credit applications (such as from seeking consolidation financing) result in a ‘hard hit’ that temporarily affect your credit score.
• If you pay off any debts using a credit counselling plan this will be reflected on your credit history for two years; three if you consolidated and cut your debt with a Consumer Proposal; six if you file for bankruptcy (which can result in full debt forgiveness for all your debts).

The anxiety of credit score VS paying down your debt is real. For people concerned both about how to maintain your credit score and pay down debt, it’s helpful to understand that:

• Even if you maintain a ‘good’ credit score, without a major asset, high income, and/or a co-signer, it can be difficult (if not impossible) to get more credit such as a consolidation loan at a ‘best rate’.
• By addressing your debt, you will be doing more for your credit score and yourself; scores are always changing, and you can productively change your score in a relatively short period.
• The sooner your debts are paid off, the faster you can benefit from (often dramatic) improvements to finances. Imagine how different things would be in your household without the burden of debt!

How to Better Manage Credit and Debt, and Mistakes Not to Make – Learn More

What the Experts Want You to Know About Dealing with Debt 

There’s a lot to know about debt and debt strategies, but two things many debt experts (and certainly Sands & Associates’ Licensed Insolvency Trustees) would agree we wish people knew are:

1. You do not have to pay to get honest professional debt advice

Bring your questions to a Licensed Insolvency Trustee and get advice before you make moves in dealing with your debt. You want to be certain you get complete and accurate information from a qualified professional. At Sands & Associates consultations are confidential, without judgment – and always free.

2. A debt problem can happen to anyone at any time, despite “doing all the right things”

You do deserve support, and to be treated with dignity and respect. You are not alone, we are here to help you move forward with your life.

As Licensed Insolvency Trustees one of the main services we provide to people is helping them better understand their personal debt situation, and all their options for dealing with debt. We’ve outlined just a few common questions here, but everyone’s situation is unique and you should never be afraid to seek support from a Licensed Insolvency Trustee so you can make informed decisions about how to move forward.

Sands & Associates is here for you with support and solutions. Get advice from experts who care, and a plan to be debt-free – book your free confidential debt consultation today.

The post Learn the Answers to Top FAQs Debt Experts Hear appeared first on Sands & Associates.

Canadian Debt Relief Options

Informally and formally, there are different options that can provide varying degrees of debt relief for an individual. Not every option will be suitable for the debt relief you need – it’s critical that you weigh how each solution works against your specific situation, needs, and goals. Don’t simply settle for an option that doesn’t offer enough benefit for you!

Some people may need debt relief only in the form of a consolidation loan with a consistent interest rate, while others may find their best debt solution is a Consumer Proposal that combines consolidation with debt reduction and a streamlined repayment plan.

Here are some common debt management strategies you might consider if you live in Canada, and the overall measure of debt relief you might expect:

Informal Debt Solutions

Debt Consolidation Loans: Combining your debts into one new bank loan (or sometimes line of credit) can offer some relief in that:

• The interest rate is consistent (and hopefully lower) across all (now combined) debts
• Payments and a pay-off plan are (usually) set, taking the guesswork out of juggling multiple payments and a completely DIY repayment approach

Borrowing as a debt solution is not without potential challenges. Consolidation loans can pose problems of their own and at the end of the day you are still repaying all your debts in full, with interest:

• You need to qualify for a loan that has a reasonable interest rate. Often this is not possible without an asset to pledge as security on the loan, or a co-signer (and both can be risky!).
• If you qualify for a loan with a better interest rate than you are currently paying, your payments may still be high. You need to ensure you can afford to consistently make those payments for the entire duration of your borrowing agreement.
  • Don’t overestimate your ability to meet payment requirements, pay your regular costs of living and have funds left over for savings in case of emergency. Many people find they end up with a consolidation loan and a new balance on their credit cards because they have not taken a realistic look at their monthly income and expenses.

Borrowing Isn’t Always Best for Consolidating Debt – Read More

Credit Counselling Plans: A credit counselling repayment plan may offer relief from ongoing interest charges on debts eligible to be managed through this type of informal plan:

• You can combine many basic consumer debts into a credit counselling plan that runs over a period up to five years
• Creditors often (but not always) agree to stop charging interest on the eligible debts
• Many credit counsellors offer resources to help you boost your financial skills and knowledge

Credit counselling can have some drawbacks however, including:

• Credit counselling plans have a cost, even if you are working with a non-profit agency (non-profit does not mean all services are free). Even with the relief of future interest charges, you may not cut payments substantially since you will be paying a credit counselling fee on top of paying back all your debt to your creditors.
• There are several common debts, including all types of government debts, that aren’t eligible for credit counselling plans.

Many people are unaware that credit counselling is an informal (i.e. NOT legally regulated) debt relief option – anyone can call themself a credit counsellor without any specific training, and there are many aspects of this type of service that are not well supervised.

Debt Settlement Agreements: Debt settlement agents offer services for debt relief by attempting to settle your debt (usually one account at a time) for less than you owe by offering a one-time, lump sum payment that is typically substantially less than the total balance owing. You can also attempt this type of settlement on your own if you already have a lump sum of money.

Proceed with extreme caution when it comes to companies offering these debt negotiation services:

• Most will charge a high fee for their services
  • Many will even charge you to refer you to a Licensed Insolvency Trustee, even though you can connect directly with a Trustee on your own
• Like credit counsellors, there is little oversight for these informal types of debt services
• Because most people need time to save up a lump sum to offer a creditor and are directed to stop paying their debts while they do so, creditors often escalate collection action in the meantime.
  • Agents cannot offer you any protection from your creditors and neither debt settlement agents nor credit counsellors can compel your creditors to accept their services / your offer.

Debt Management – or Debt Mistake? Learn More

Don’t be fooled by advertising – there is no such thing as ‘fast credit repair’ or ‘government debt programs’ ‘government debt grants’ etc. Similarly, clearing your credit history and boosting your credit score simply takes time and some thoughtful strategy, there’s no magic solution to discover.

A few provinces have debt payment alternatives such as Alberta’s Orderly Payment of Debts and Voluntary Deposit in Quebec, but as far as ‘government-approved’ ways to clear debt, the only methods in Canada are the legal debt relief options available by working with a Licensed Insolvency Trustee.

Formal (Legal) Debt Solutions

As Licensed Insolvency Trustees we work with many people who arrive discouraged and/or frustrated because they tried a credit counselling plan or have taken out a consolidation loan to no real success. Even if you’ve tried an informal solution before but not been able to get out of debt, don’t underestimate the huge advantage of the debt relief available through a formal solution working alongside a Licensed Insolvency Trustee.

Consumer Proposals: This legal, non-borrowing consolidation solution offers several considerable debt relief measures. Working with a Licensed Insolvency Trustee you can file a Consumer Proposal that will:

• Consolidate virtually all types of debt (consumer, business, and government debts) with no interest or other added costs
• Offer to repay your creditors the portion of your debt that you can afford to repay, in full and final settlement (reductions of up to 50-80% of your total consolidated debts are common)
• Legally stop creditors from pursuing you for payment, collections or charging interest
• Give you a set repayment plan of up to five years with a clear debt-free end date

There are no fees added to what you pay back to your creditors in a Consumer Proposal. A tariff-based administrative charge will be paid from the money your creditors receive – all you pay is what you’re offering your creditors. For example:

• A Consumer Proposal could consolidate your total debts of $40,000 by offering your creditors $12,600 (31.5% of the total balance outstanding), under which you would make payments of $350 per month for 36 months.
  • No added fees, no interest, no borrowing
  • Immediate relief from creditors
  • Pay off your Consumer Proposal early at any time without penalty

How Much Debt Can a Consumer Proposal Write-Off? Learn More

Consumer Proposals are almost always accepted by creditors and you’ll have the ongoing support of a Licensed Insolvency Trustee throughout the process, including access to one-on-one financial counselling sessions and professional resources.

In situations where it is just not possible to make meaningful repayment on your debts, the final option for debt relief that you may consider is…

Bankruptcy: Personal bankruptcy is a short duration and relatively straightforward process that offers immediate debt relief and can result in 100% forgiveness of all your debts. This often-misunderstood process can provide a financial fresh start in as little as nine months.

To explore all your options and get trustworthy advice about dealing with your debt, a Licensed Insolvency Trustee is the right professional to help you.

Why Work with a Licensed Insolvency Trustee?

Licensed Insolvency Trustees are fully government-regulated and endorsed debt help experts. We are empowered to serve Canadians with a range of debt management services and are the only professionals with the power to provide legal solutions that can allow you to have virtually all your debts forgiven – from credit cards to payday loans, outstanding tax debt to lines of credit and so on.

You don’t need to be dealing with an extreme situation, like not being able to make your payments or being sued by a creditor, to seek support from a Licensed Insolvency Trustee. Although we can stop drastic actions such as a wage garnishment or court process, we always encourage you to seek a Licensed Insolvency Trustee for support as early as possible. Doing so can save considerable stress and worry, not to mention time and money!

Difficulties paying down debt are often shrugged off as ‘normal’, but the reality is that common debt problems like these can be overwhelming – and keep you in debt for years. Does any of the following sound familiar to you?

• You’re not able to pay much more than the required minimum monthly payments on your credit card or other balances
• You make payments then use credit again, effectively keeping you in a cycle of debt dependence
• You’ve consolidated your debt with a loan or other product but still feel financially squeezed
• You feel like lingering debts with ‘bad credit’ or ‘past money mistakes’ are preventing you from moving forward with your financial goals or other milestones
• You’re stressed out, anxious or overwhelmed by your debt situation
• Your current pace of repayment will have you paying (non-mortgage) debt for more than five years

No matter what your personal circumstances, know that debt is a problem like any other in that it does have solutions – and we’re here to help you find the one that’s right for you. 

Connect with a Licensed Insolvency Trustee in BC

Sands & Associates works with residents across BC and our services are available both online and in-person at local offices throughout the province. In less than hour we can help you better understand your situation, weigh the pros and cons of various debt solutions, and give you clear guidance on your next steps with the debt relief option you choose.

We want you to come away from your free debt consultation with a plan to move forward, and confidence that you are on your way with a solution to deal with your debt.

Debt help without judgment, it’s that simple! Get started with your debt-free plan by connecting with a caring expert from Sands & Associates today – book your free confidential consultation now.

The post Options for Consumer Debt Relief in BC 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.

Receiving word you may need to repay some or all the benefits you received can be stressful to say the least. On top of regular bills and other debts, an unexpected new debt is something that will understandably upset many people’s finances. Most people don’t have the available cash to simply repay an unanticipated balance outright, and many others are still experiencing ongoing financial impacts of the COVID-19 pandemic.

About the Canada Emergency Response Benefit “CERB” and Repayments

The Canada Emergency Response Benefit “CERB” was a government measure aimed at providing financial support for Canadian workers who were impacted by the COVID-19 pandemic. The basics of this taxable emergency benefit were that eligible people could receive $2,000 for each applicable 4-week period. Financial assistance options later changed, and people could be eligible for recovery benefits such as Canada Recovery Benefit and others through Employment Insurance.

From mistakes in applications to receiving duplicate payments and more, there are a few reasons why people may now expect to, or have already been called on, to repay CERB they previously received, including:

• You applied and it was later determined you weren’t eligible (not meeting income requirement, etc.)
• You earned more income than you anticipated when you received CERB (resumed employment earlier than anticipated, received retroactive pay from employer, etc.)
• You received CERB from both EI/Service Canada and CRA for the same eligibility period

How is the Government Collecting on CERB Repayments?

Canada Revenue Agency (“CRA”) collects CERB overpayment and other COVID-19 benefit debts on behalf of Service Canada (among others) and has recently stated that:

• If you received benefits you weren’t entitled to, you will be sent a notice of redetermination.
• If you can’t pay your overpayment debt in full now, no interest or penalty will be applied on your COVID-19 benefit overpayment debts.
• If you have a balance owing your future payments, tax refunds or GST credits (all or a portion of) may be kept by CRA until your debt is repaid.
  • Even if you have a payment arrangement in place CRA can take amounts from any credit you receive to repay your debt.
  • If you’re receiving EI benefits repayment of CERB debt will be recovered by Service Canada automatically at 50% of your EI benefit rate.

An Overview of Wage Garnishment in BC – Learn More

I’m Worried About Repaying my CERB Debt – What Can I Do?

If you have discovered you must repay CERB amounts you received but are unable to repay the full amount you owe immediately, or can’t afford the minimum monthly payment on your statement of account, you may wish to contact CRA to discuss making manageable repayment arrangements.

• You can also connect with CRA if you disagree with your overpayment, suspect fraudulent activity or want to discuss an automatic recovery from EI benefits at a lower rate.
• Be careful of the fraudulent texts, calls and emails claiming to be CRA that are still widely circulating.

CRA has stated that if you don’t call or make payment arrangements, they may take legal action to collect on your balance owing. CRA is encouraging people not to ignore these debts, and we agree!

What Does it Mean for CRA to Take Legal Action to Recover a CERB Debt?

CRA is a powerful creditor who can quickly (with virtually no notice to you!) take extreme steps, but at present seems to be taking a milder approach to collecting CERB repayments, in contrast to their often-forceful approach to realizing on other debt. Common remedies often applied in collecting on debts such as student loans, government benefit overpayments, income tax debt, business GST and more include (but are not limited to):

• Garnishment of wages and other income
• Seizures or holds on bank accounts
• Registering a lien on your home or other property

Once CRA has started legal actions they won’t usually withdraw them, but a Licensed Insolvency Trustee can offer you solutions to make them stop. We highly recommend people seek a local Licensed Insolvency Trustee right away if challenges repaying ANY kind of CRA debt are anticipated. There are options for CERB overpayment forgiveness and virtually any other type of debt, whether owed to a government body or a common consumer lender.

In our experience as Licensed Insolvency Trustees many people struggling financially have found themselves in difficult situations aggravated due to factors outside their control. Dealing with a debt problem can feel hopeless, but you are not alone – and solutions and support are available. You deserve to live without debt and its overwhelming stress

Get support, understand your options and move forward with the debt-free plan that’s right for you. Connect with a local Licensed Insolvency Trustee today.

The post What Happens if I Can’t Afford my CERB Repayment? appeared first on Sands & Associates.