• 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.

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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.

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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 about the credit counselling and financial literacy resources available to individuals working with a Licensed Insolvency Trustee on a personalized debt-free plan.

Goals of Financial Counselling Sessions with a Qualified Insolvency Counsellor 

Licensed Insolvency Trustees help people deal with their debt, and if you’ve decided to work with a Licensed Insolvency Trustee on a debt solution like a Consumer Proposal (a special type of debt consolidation) or personal bankruptcy (a legal debt forgiveness solution), you’ll complete two one-on-one financial counselling sessions as part of either insolvency process – and there is no added cost to you for this service.

The “Insolvency Counselling Program” is intended to help people boost their financial literacy, gaining confidence in their ability to manage their personal finances, and provide tools and resources for ongoing future success in money matters. After completing a Consumer Proposal, or exiting personal bankruptcy, people have a financial fresh start and can move forward with their lives – debt-free.

Who is a Qualified Insolvency Counsellor?

The Licensed Insolvency Trustee who is ultimately responsible for your Consumer Proposal, bankruptcy, and related counselling sessions may lead your counselling sessions themself, but most often these private, one-on-one sessions are led by a Qualified Insolvency Counsellor who works closely alongside your Licensed Insolvency Trustee. This is a registered professional financial counsellor who has:

• Successfully completed a practical course for this unique type of counselling.
• Proven to and been registered by your Licensed Insolvency Trustee as possessing the necessary training, experience, knowledge, skills, and competencies to lead insolvency counselling.
• Completed ongoing professional development training every two years.
• Demonstrated that they are of good character.

Quality of care and service is of the utmost importance in these matters, and your Licensed Insolvency Trustee cannot register anyone as a Qualified Insolvency Counsellor who is involved with activities that may be a potential conflict of interest, or could potentially negatively impact the people they are counselling.

4 Questions to Ask When Choosing a Credit Counsellor

Financial Counselling Topics – Stage 1: Budgeting and Planning

Your first confidential counselling session with a Qualified Insolvency Counsellor will usually take place shortly after you file your Consumer Proposal or declare bankruptcy (somewhere between ten and 90 days), and this one-on-one session might be done in-person, or remotely via videoconference (or over the phone).

Budgeting is the focus of this conversation, and the goal here is that you’ll come away with information and support to help you create and maintain a functional household budget realistic for your personal situation.

• A balanced budget is an important financial tool, and every consumer should have one. Budgeting isn’t about restricting what you can and can’t do, it’s about making confident and thoughtful decisions about how you will use your income.
• No two situations are the same, and it’s important to consider and strategize the different components of your budget to find what works best for you and your household.
• In a Consumer Proposal your debt will be combined then cut into one consolidated (usually) monthly payment, (or in a bankruptcy most people pay a minimal administration fee), and this is typically a substantial reduction from the multiple payments you may have previously been trying to manage in your budget.

How Much Debt will a Consumer Proposal Eliminate? Learn More

This first financial counselling session is a great opportunity to work with a professional to fine-tune your new spending and saving plans, and maybe even learn some new tips and best practices. Your Counsellor will plan to review your budget together with you, and offer support such as:

• Mapping out a plan for record-keeping, and how you will track and check-in and evaluate your estimated VS actual income, expenses, and general budgeting in future.
• Developing strategies to adjust your budget, and for managing unexpected changes to your budget or impacts to your income.
• Addressing any other circumstances or financial difficulties you may want extra guidance on or support / resources for.

Financial skills take time for everyone to learn, and there are often some trials and errors along the way. Once you’ve got a solid understanding, you’ll be in that much better a position to make well-informed and confident decisions about money matters that impact you and your family.

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

• As well as these two credit counselling sessions that are done as part of completing your Consumer Proposal or bankruptcy, there is an optional self-directed online learning program available to help you get the most out of this opportunity for individual learning and support.
• The online modules offer an introduction to the topics that will be covered in depth during these private sessions, and if you’re able to become comfortable with some of these materials before your sessions, you’ll have more time for tailored resources and support with your Counsellor.

Financial Counselling Topics – Stage 2: Goals, Spending and Credit 

Your second one-on-one session with a Qualified Insolvency Counsellor is done at least 30 days after the first, and again may be done in-person, or remotely. While the first session was all about budgeting stages, strategies, and tools, this second session focuses on your future planning and providing you support to continue moving forward with (debt-free!) success.

Your Counsellor will check in with you about how you’re doing with your Consumer Proposal (or bankruptcy), your new budget, and together you’ll review several other key financial literacy topics, which include:

• Financial goal setting
  • Why, and how to set SMART (specific, measurable, achievable, relevant, time-bound) goals.
  • Specific support in creating a plan to achieve these goals.
  • Strategies to help you meet your spending and savings goals.
  • Identifying, avoiding, and mitigating potential financial risks that could get in the way of your future financial success.
• Spending habits
  • Practical ways to prioritize spending, and spending systems.
• Using and managing credit as a tool
  • Best practices for using credit well.
  • Considerations and questions to ask lenders before borrowing.
  • Breaking down and comparing the costs of borrowing.
  • Types of credit that are considered high-risk.
• Understanding credit scores and reports
  • Establishing a responsible credit history and habits.
  • How and when to check your credit history reports.
  • Steps you will want to take after your Consumer Proposal (or bankruptcy) is complete.

A lot of people worry they have no way to get out of debt – or that by working with a Licensed Insolvency Trustee they may compromise their future financial goals or ability to get credit in future, but the reality is that with options like Consumer Proposals, or even bankruptcy, most people are able to get to debt-free much sooner than if they were to continue trying to chip away at their debt on their own.

The financial fresh start of these processes allows individuals a means to take back control of their finances and make the most of their income. Without the constant nag and weight of burdensome debt, not only to personal finances, but wellbeing, there is much more space to look to the future with optimism.

Meet some of the people whose lives have been changed working with Sands & Associates

More About Debt Help Services from BC Licensed Insolvency Trustees 

Getting confidential debt advice from a qualified expert couldn’t be easier – simply reach out and contact a Licensed Insolvency Trustee local to your area. All Licensed Insolvency Trustees offer a free confidential consultation where you’ll have opportunity to better understand your situation and explore ALL your options.

Sands & Associates serves all of BC and offers our full suite of debt help services in person at local offices throughout the province, as well as over the phone or video conferencing.

• Take an hour and talk with a Licensed Insolvency Trustee; we can give you a debt-free plan that works for you and your unique situation, and, as Canada’s only appointed debt help professionals, offer you additional resources and insights you may not otherwise be aware of.
• No referral is necessary to connect with a Licensed Insolvency Trustee. If you are asked to pay any referral fee this should be a warning you are not talking with a Licensed Insolvency Trustee.

You Are Not Alone in Dealing with Debt – We Are Here to Help You 

You do not need to be behind in your debt payments to seek professional debt solutions or use a Consumer Proposal to consolidate your debt. In fact, many people we work with have never missed a payment and hold a good credit rating, but realize that at their current rate of repayment, they will be facing years or decades of debt payments.

If, however, you are dealing with a serious or urgent financial issue such as a creditor who is threatening you with legal action for a debt, or already garnishing your wages, we can work with you to quickly implement a solution that will stop these collections immediately.

Learn More About Wage Garnishment

Some questions or concerns we commonly address include (but are certainly not limited to):

• Debts are generally worrying you, or your household is being negatively impacted by debt.
• Your monthly debt payments aren’t enough to pay off your (non-mortgage) debt within five years.
• Ways to consolidate and/or cut debt.
• What options exist to deal with a specific creditor or whether a debt is collectable?
• How you can get debt relief or forgiveness by your creditors.

You don’t have to try to interpret all your rights and remedies to deal with your debt, a Licensed Insolvency Trustee is your go-to resource, and we provide safe accurate advice and information to consumers every day.

Many people feel embarrassed about their financial situation, or worried about being judged or even scolded about having difficulty managing their debt; please, know that Sands & Associates is a judgment-free zone.

We believe that a money problem can happen to anyone at any time, and that everyone deserves the opportunity for help and a financial fresh start to move forward and live their best life! You owe it to yourself to get debt help, and we are here for you.

Connect with local debt experts who care – book your free, confidential debt consultation with Sands & Associates today.

The post Financial and Credit Counselling with a Qualified Insolvency Counsellor appeared first on Sands & Associates.

From strained mental health, to fractured relationships and more – the toll of debt is often much more than a financial one, and despite these overwhelming impacts of dealing with problem debt, only 5% of people polled in the 2022 BC Consumer Debt Study said they sought help right away from a debt professional.

BC Licensed Insolvency Trustee Blair Mantin, President of Sands & Associates, says “You owe it to yourself to seek debt help,” and suggests that more open conversations and access to non-judgmental support are key to removing hurdles for people who may be struggling with debt and its devastating impacts.

Does Debt Impact Mental Health? Latest BC Consumer Debt Study Says Emotional Burden Can Be Substantial

Debt Solutions and a Financial Fresh Start

Meet Pratap, Dan, and Heidi. They each have first-hand experience in dealing with – and resolving – problem debt, and in a bid to help others seek support and solutions, spoke with Global News about some of their own personal experience in dealing with debt.

Meet Pratap and learn how his financial struggles escalated during the COVID-19 pandemic:

Meet Dan and learn about his journey through recovery and managing overwhelming debt:

Meet Heidi and learn how she overcame her financial difficulties to create new habits and healthy boundaries:

The individuals surveyed in the 2022 BC Consumer Debt Study ultimately chose to manage their debts with a legal debt relief solution, either by consolidating their debt with a Consumer Proposal or by filing personal bankruptcy. Over 90% felt satisfied, if not extremely satisfied by their choice, and expressed positive outcomes from their decision to get professional debt help, including:

• Over 7 in 10 people said their experience receiving professional debt help allowed them to improve their budgeting and/or savings skills, and 57% reported being more confident in day-to-day financial management because of their experience.
• 53% of participants said they have a better understanding about credit and borrowing.
• 39% said they are more open in discussing finances and general money matters with others.

Get Debt Help Today – You Owe it to Yourself 

If you are struggling with debt, know that you are not alone, and that there are solutions to help you live your best life – without debt.

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

• Licensed Insolvency Trustees are Canada’s only fully regulated and endorsed debt help experts, empowered to serve Canadians with a range of debt management services.
• You do not need to be dealing with an extreme situation to seek support from a Licensed Insolvency Trustee, and BC consumers can request a free confidential consultation with Sands & Associates by phone or video, or in person from a local office.

Move forward with confidence and optimism for what the future holds. Book your free, non-judgmental debt consultation today – you owe it to yourself to get debt help.

The post Dealing with Debt – Global News Features Real Stories from BC Consumers 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.

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.

Licensed Insolvency Trustees often hear from people with concerns not only about their own debts, but about debts their partner or spouse, or other family or friends may be dealing with. Many also worry about the impacts their own unpaid debts might have on their partner or family.

Read on for guidance to help mitigate or even avoid some of the familiar challenges debt can bring to you – and your important relationships.

Common Causes of Debt Problems in Relationships

There can be a lot to navigate when managing your money on your own, and when you add someone else to the equation things can get complicated quickly. Here are some frequent problem debt situations to be on guard against:

Misunderstandings About Legal Responsibility to Creditors

Many people are under the impression that if you marry (or are in a cohabitation relationship with) someone, you also marry their debt. This is false! Contrary to what you may have heard, there is no automatic liability that spouses assume to each other’s creditors just by being married.

• For example: If a person owes a bank $10,000 for a line of credit they took out as a sole borrower, then gets married, the bank is not suddenly able to turn to their spouse to pay that debt if the original borrower stops making the payments.
• This is especially important to understand before you pay off the debts of one spouse at the expense, or using the assets, of the other. Doing so you may be giving the creditor a greater return than they could otherwise achieve, to the detriment of the financial health of the couple.

Rather than being responsible for your partner’s debt through marriage or living together, a shared responsibility for ‘spousal debt’ may be triggered from:

• Co-signing or co-borrowing on debts together, including loans, leases, credit cards, etc.
  • Any time you co-sign a debt you need to understand it is not a 50/50 commitment. ‘Joint and several’ liability has each borrower responsible for the entire unpaid balance, not half.
• Debts deemed as ‘family debt’ following the act of separation or divorce under BC’s Family Law Act.
  • Creditors will continue to seek payment and collect on the debt from the legal borrower(s), even when debt becomes ‘divorce divided.’

Joint debt problems can linger long after a relationship ends, and people can be left struggling with debts they co-signed but never anticipated having to make payments on in situations where:

Your Former Spouse or Partner Isn’t Paying Debt as Agreed in the Relationship

If you have co-signed / joint debt with someone, you are equally responsible for paying back 100% of the unpaid balance due to the lender if the other person doesn’t pay, regardless of what the understanding between you and the other person was at the time.

• Some borrowing agreements even have an ‘acceleration’ clause which lets the creditor demand the full balance immediately if any part of the agreement is broken (like missing payments).

Always be clear and on-board with what you’re committing to. No matter the relationship, proceed with caution before you agree to co-sign or co-borrow with another person (or business).

• Be careful buying or leasing a vehicle together. Many people fail to realize the full commitment of joint vehicle financing because their partner plans to be the primary insurer and driver.
• Don’t assume that secondary credit cardholders have a lesser responsibility, credit card terms may vary depending on the lender.

Understanding Debt Liability for Couples and Families – Learn More

Managing Debt and Household Money Matters in Your Relationship

Money can be a touchy subject, but it doesn’t have to be. No matter how long you’ve been living together, it’s always a great time to make positive changes – and if you can do this before sharing a household, even better. Start the conversation – get things moving out in the open and working together.

When it comes to a family’s budgeting and other financial strategies there’s no one right way to do it well – people need to decide together how to manage their finances in a way that works for everyone.

Have Open and Ongoing Conversations

Whether you decide to split household bills equally, based on percentages of each person’s income, assigning specific bills, or pooling it all, you won’t know the best way to manage your household finances unless everyone speaks up and has a say – and the sooner the better. In addition to deciding together how to manage costs, you might want to also consider:

• How you’re going to keep track of actual VS planned incoming and outgoing funds.
  • If possible, give some room for individual personal spending power; plan and budget for each person to have some set discretionary spending money they can use as they see fit.
• Talking about your individual financial goals and setting some goals you can work on together.
  • Do you have hesitations about taking on a financial commitment? Want to be saving for a big purchase? Share what’s in your heart and on your mind.
• Setting a standing meeting date and make it something you could look forward to doing together; “burgers + bills night” or “budgeting happy hour” – make it your own!
  • Financial management never ends, so ensure you regularly connect and discuss your household money matters, in whatever way is best for you.
• Don’t be afraid to seek legal guidance to get organized, whether your relationship is ending or not. Tools such as cohabitation agreements aren’t just for celebrities or the ultra-rich and having a cohabitation agreement helps you understand where you’ll be at if the relationship ends.

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

While the best strategy is the one that provides the best outcomes everyone, you may want to avoid approaches that risk compounding dysfunction and could lead to resentment and miscommunication, for example where:

One Person Handles All the Finances

Sometimes there’s a tendency to delegate responsibility for managing all aspects of a household’s finances to one person, often because of a belief that “they’re better with money.” No one is born with money management skills; these take time to learn and understand.

• Expecting one partner to oversee everything from budget to bills to taxes and more is often a recipe for trouble. While it’s great to draw on stronger skillsets, one person shouldering everything alone becomes overwhelming and frustrating very easily.
• You might delegate certain aspects like bill paying, but it’s important everyone is actively involved, on the same page, and aware of what’s happening.

Although intentions may always be good, life happens, and unexpected events can create unanticipated financial challenges. Should this happen:

Don’t Try to Hide Money Troubles or Financial Issues

A debt problem can happen to anyone at any time, regardless of ‘doing all the right things.’ Many issues outside our control can leave us unable to keep up with all of our financial obligations. Fortunately, help is out there, whether you’re facing a challenge with debt solo or as a family – you are not alone and there are reputable, compassionate, professionals who will assist you in resolving debt issues together.

• As much as you may want to avoid dealing with a debt problem, especially if you worry about your partner’s reaction, it’s much better to confront the issues head-on. A lot can be gained though honesty with your partner and our best advice is to seek to understand the full situation and how to move forward together.
• Honestly, openness, and showing kindness to ourselves and our partner can go a long way – avoid blame or shame in these difficult situations.

Don’t hesitate to contact a Licensed Insolvency Trustee for non-judgmental professional guidance too. Licensed Insolvency Trustees are Canada’s sole debt professional fully empowered and qualified to offer advice about your situation and solutions to deal with debt for good.

Consolidation & Consumer Proposal Calculator | Compare 4 Debt Options

Getting Debt Under Control

One of the best ways to set yourselves up for financial success as a couple or family is to deal with your debt. Taking debt right out of the equation can make a significant impact both individually and to the household unit.

• Consider alone the energy spent on the constant nag of credit card bills or loan payments, not to mention the money that debt payments take away from your budget.
• From arguments between partners to strained family relationships, many of Sands & Associates’ clients have shared with us how much debt affected their relationships before working with a Licensed Insolvency Trustee to take back control and put a stop to ongoing debt issues.

You may have multiple options to decide from in creating the debt-free plan that’s right for you and your situation. It will be important to consider whether you’re dealing with just one person’s debts, separate debts, and/or joint debts. A Licensed Insolvency Trustee can help you understand the varied factors to consider and weigh all the pros and cons.

• Seek support from a Licensed Insolvency Trustee right away if there are signs that your debts are becoming a worry. Many people struggle for a long time unnecessarily because they don’t know the facts, their options to resolve problem debt, or how they can better manage paying off debt.

There are accessible solutions to protect you from creditors and help you and/or your spouse or partner reduce and pay off debt in a timely and affordable way.

Access Professional Debt Help Services and Support in BC

Sands & Associates serves residents across BC and getting advice and information about all your options is as easy as setting up a free confidential debt consultation. We offer all our services virtually or in-person, so you can get support in the manner most comfortable and convenient for you.

• There is no cost to connect, and it could take less than an hour to get your debt-free plan.

Whether you are starting to worry about your debt, have felt stressed for some time, have a ‘great’ credit score or are facing collection actions – we are here for you, without judgment.

Sands & Associates’ caring experts help residents across BC get the debt-free plan that’s right for them. Connect today, book your free confidential non-judgmental debt consultation.

The post Dealing with Debt and Financial Stress in Your Relationship appeared first on Sands & Associates.

What is a Consumer Proposal?

A Consumer Proposal is one of two main legal debt solutions available in Canada to help individuals deal with their debts. They have been around for decades, but changes to the rules for Consumer Proposals in the late 2000’s made them more accessible and more popular than ever.

Combining the advantages of debt consolidation with legal backing and the ability to negotiate partial debt write-offs, Consumer Proposals are one of the best and most powerful ways to get debt paid off. Here are the basics of how a Consumer Proposal works:

• A Consumer Proposal allows you to combine and manage all your debt into one consolidation where you will offer to repay an affordable amount of your debt back over a period of up to five years.
  • Most people offer to repay 20-50% of their total debts by making monthly payments.
  • Creditors will agree to write-off/forgive the unpaid portion and consider your debt paid in full.
• You can include almost every kind of debt, including but not limited to: credit cards, overdrafts, payday loans, lines of credit, government debts such as tax debts, student loans and more.
  • Other than filing for bankruptcy, a Consumer Proposal is the only method of settling debt that the government will accept to forgive a portion of your government debts. It’s important to note that settling government debt in this manner will not prevent you accessing government benefits in the future.
• The debts you owe are frozen, so they stop accumulating creditor interest charges. There is also no added interest for doing the Consumer Proposal since no borrowing is needed.
  • Your credit score is not a qualifying factor; to do a Consumer Proposal you’ll work with a Licensed Insolvency Trustee, not a lender.
  • Licensed Insolvency Trustees are the only legal debt solution providers appointed and endorsed by the Federal government and do not charge added fees for their services. The Consumer Proposal laws set out the costs, and those are paid out of the creditor’s funds.

The double advantage of cutting debt and stopping interest makes the monthly payments in a Consumer Proposal often the lowest among debt management consolidation options.

Difference Between Consumer Proposal and Consolidation Loan Payments – Example

An individual owing $25,000 total between a few credit cards and an overdraft might be looking at a five-year debt repayment plan with options such as these to choose from:

• Payments of $635/month to fully pay back their debt at 18% interest compounded annually.
• Payments of $555/month with a 12% interest consolidation loan.
• Payments of $415/month PLUS program fees and other charges to pay back all their debts using a no-interest credit counselling
• Payments of $125/month with a Consumer Proposal to settle all their debts by repaying just 30% of their total debt (without interest or added service charges).

Compare Your Debt Options

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

Consumer Proposals are a highly flexible solution – you can even pay off your proposal early at any time without hassle or penalty – and each Consumer Proposal is tailored specifically to be manageable within an individual’s unique situation.

• Canadians who owe between $1,000 and $250,000 (not including any mortgages on your personal residence) may consider doing a Consumer Proposal to deal with debt.
  • If you owe more than $250,000 a different type of proposal could be an alternative to consider.
  • If two or more people file a joint Consumer Proposal together (spouses, business partners, etc.) the total debt limit doubles to $500,000.

How Would I Be Involved in my Spouse’s Consumer Proposal?

One of the first things that couples should understand is that although they may share a household and partnership, when it comes to debt each person is their own entity, independent of the other.

Simply put, one spouse is not liable to the other one’s creditors just because they are married or in a common-law relationship. One spouse doing a Consumer Proposal does not change this, nor does it somehow rewrite the responsibility for the debt.

Whether you and your spouse hold any joint debt together is something to consider when you’re weighing your options to deal with debt:

• If a couple is in a situation without co-signed / joint debt one spouse can make a Consumer Proposal to consolidate, cut and pay off their debts with no impact to the other spouse.
• The Consumer Proposal process is quite private, and typically only your creditors will be contacted. Because individual debts are so separate between spouses (absent co-signing) it is quite possible to completely resolve debts without involving your partner at all.

In many situations spouses have at least some key debts in common, so it can be advantageous to file a joint Consumer Proposal together to deal with all your combined debts – but it is not a requirement for both partners to do this.

What Happens in a Consumer Proposal When Spouses Have Joint Debt Together?

In situations where spouses have joint / co-signed debt there are several possibilities to consider when it comes to options to deal with debt. For example:

• You might decide it makes the most sense to do a joint Consumer Proposal together to consolidate and manage all your combined debts. Debts you have jointly AND separately would be included.
• If joint debts are minimal but you both have moderate separate debts, then you might each file your own Consumer Proposal that would include the shared and respective separate debts.

It’s important to understand all your options so you can decide what will work best for your family unit to move forward in dealing with debt. We highly recommend connecting with a Licensed Insolvency Trustee who can talk with you confidentially to help you understand all the pros and cons in detail as they relate to your unique situation.

Learn More About Preparing for Your First Meeting with Sands & Associates

Understanding How a Consumer Proposal Works

There are many specifics on the ins and outs of Consumer Proposals that are discussed during our confidential consultations, including details of the following common areas of concern:

How Does a Consumer Proposal Affect My Assets?

Since most Consumer Proposals will deal with your debt through monthly payments, usually your assets (and the assets of your spouse) are entirely unaffected by a Consumer Proposal. This also includes assets tied to a secured debt such as a mortgage or financed vehicle.

How Does a Consumer Proposal Affect My Income?

Income you, your spouse, or other family members earn during your Consumer Proposal is (respectively) yours, and does not need to be reported to the Trustee in a monthly budget like in a personal bankruptcy.

How Does a Consumer Proposal Affect My Credit?

A Consumer Proposal is noted on the individual’s credit history for only three years after their Consumer Proposal is finished (or six years from the date it started, whichever is soonest). If a debt belongs solely to one spouse (i.e. not a co-signed/joint debt) and they do a Consumer Proposal (or bankruptcy), it has no effect on the other’s credit history or credit score.

• You can apply for new credit any time, and most people are eligible for standard rates/terms on everything from credit cards to mortgages with one or two years of finishing their Consumer Proposal.

Is There a Risk if Your Partner Has Debt They Don’t Deal With?

Certainly, there can be a potential risk both individually and as a family unit when debts aren’t addressed. For example, in some situations jointly owned or even your spouse’s individual assets can be at risk of creditor actions.

Once your Consumer Proposal is officially filed:

• Your creditors will no longer be allowed to contact you to ask for payments
• Interest charges stop accumulating
• Collection action (calls, letters, court proceedings) must cease
• Wage garnishments, bank account seizures, etc. will be lifted

Even a particularly difficult creditor will not be able to change their mind and opt-out of your Consumer Proposal to pursue you for your debt once your Consumer Proposal has been accepted by the (dollar value) majority.

Although your spouse may not be obligated to pay your debts, oftentimes one of the biggest threats problem debt poses is in the stress that impacts the household and relationships. From overshadowing shared goals to budget imbalance and never-ending worry, debt can have very unwelcome effects.

There is a lot to consider in finding the best way to manage your debt, and it’s common (and very understandable) to feel overwhelmed or unsure about how to approach the situation. Sands & Associates’ caring experts are here to help you and your family navigate the financial challenges you may be facing, so you can move forward together, debt-free. No judgment, just support and solutions!

Your debt-free future is waiting – get started with your debt-free plan today. Virtual and in-person services are available for residents across BC.

The post What Does it Mean for Me if My Spouse Files a Consumer Proposal? appeared first on Sands & Associates.

Take it from a Licensed Insolvency Trustee – shared credit can turn into a big cost: read on to understand the ins and outs of joint debt, and why you may want to think twice before taking on co-signed debt with another party. Knowing is not owing!

What Does it Mean to Co-Sign Debt?

There could be several different reasons why people might consider having co-signed debt together. Regardless of the situation you may be facing, all parties need to be clear about the following:

• By co-signing a debt together both parties are equally legally responsible for repaying 100% of the unpaid balance to the lender. This is called a “joint and several liability”.
• Notwithstanding any personal understandings or commitments between co-signers as to who will make the payments, know that if you are the co-signer and your co-borrower doesn’t make all the payments per the terms agreed to with the creditor, that bank/lender can demand that anyone listed in the loan or agreement (i.e. you the co-signer/co-borrower) repay the entire balance – not just half.
• Lending agreements sometimes contain an acceleration clause which allows the lender to demand full immediate payment of the entire debt if a borrower breaks any part of the agreement, such as missing payments.

Co-signing a debt means you are making it easier for a creditor to recover their money if something goes wrong, and for co-borrowers there can be serious consequences including some or all of the following:

• Creditors demanding you immediately repay the outstanding balance in full.
• Contact and threats from collection agents attempting to extract debt payments.
• Notations to your credit history about payment defaults or collection actions.
  • Co-signed debt will often also be noted on your credit report to begin with, which can impact your overall borrowing capacity.
• Legal action such as asset seizures or even wage garnishment.

Many people are not able to take on someone else’s debt payments without major stress and potentially serious upset to their own personal finances. In addition to the possible financial impacts of struggling to maintain a new joint debt, financial burdens caused by missed payments on co-signed debts can strain the relationship you have with the other person.

Learn more about Wage Garnishment in BC

What’s the Difference Between Co-Signing and Guaranteeing a Debt?

There are some key differences to be aware of when it comes to co-signing VS guaranteeing debts. While co-signed debts could involve virtually any type of credit, guarantees are most commonly undertaken with respect to mortgages, loans, or business debts.

For example, a lender may require an applicant/borrower to bring on the backing of a guarantor when the borrower alone doesn’t have enough income to meet the lender’s standard, or where they have sufficient income but don’t have a strong enough credit rating.

Note below the important distinction between how payment defaults of the original borrower are addressed in each of co-signed debts and guaranteed debts:

• For co-signed debts borrowers are jointly responsible and the lender can immediately demand payment from either party.
• Guaranteeing a loan or other debt means you are promising to pay the debt if the main borrower doesn’t, but the lender must first ask the borrower for payment before turning to you as the guarantor.

It’s essential to understand the type of guarantee you are undertaking before you sign any documents as not all guarantees will be the same. For example:

• All-Accounts or Continuing Guarantee: You are committing to pay any debts a borrower owes the lender should the borrower default. This may include debt you don’t specifically know about, such as future credit extended after you sign the guarantee.
• Specific or Limited Guarantee: You are responsible for the debt of a borrower should they default, up to the value of an amount specified at the time of the guarantee.

The bottom line in any type of financial commitment or legal contract is to ensure that all parties are fully aware of the specifics being undertaken. Don’t hesitate to connect with a debt help professional or lawyer to help you interpret contract terms and understand your rights and remedies.

Learn more about Debt Help Services in BC

Before You Co-Sign a Debt

As Licensed Insolvency Trustees we are sometimes asked when it might be appropriate to co-sign a debt with someone else – the answer is “almost never.” If you make the decision to co-sign a debt with another party, we advise you to proceed with extreme caution and remember to consider whether you can financially (and emotionally) afford to take on someone else’s debt in the event they aren’t able to continue to make all of their payments.

Co-borrowing with someone else is a big responsibility, whether you’re seeking credit primarily for yourself or for someone else, always be sure everyone is fully informed and that the expectations and rights of everyone concerned are clear before signing.

Understanding borrowing terms and who is legally responsible for what is very important – below we’ve outlined some common misunderstandings co-signers often face when it comes to “the fine print”:

Joint Credit Card Accounts

• Primary cardholders are responsible for paying for purchases made by additional cardholders.
• Do not assume that being a secondary card holder will necessarily negate your responsibility for credit card debts. Some credit card terms may state that secondary cardholders are responsible for outstanding balances, even if the original card application wasn’t signed by them.
• “Additional cardholder” “Co-borrower” “Co-applicant” and other terms can have different meanings, ask for clarification and don’t make any assumptions.
• If you have shared credit cards, clear communication and reviewing monthly statements with each party noted on the statement are musts. Keep track of the status of the account and balances, ensuring both borrowers are fully aware of payments due and made, as well as any changes to the terms and agreements.

Co-Signed Loans

• Be clear about how much the loan is for and whether the loan’s terms allow the borrower to increase the credit amount.
• If you have co-signed a loan with someone else, you should know that all borrowers have the right to receive information from the lender about the loan.
• Unless you consent in writing or verbally to waive this right, the lender must provide everyone associated with the account copies of the credit agreement and monthly statements.
• When the loan is paid off it’s a good idea to confirm with the lender that you’re no longer liable as a co-signer. You may also want to request official documentation such as a letter of acknowledgement or release to prove you are cleared of further liability.
• The same caution applies during the purchase or lease of a vehicle – many people simply do not realize the full commitment they are making on a co-signed vehicle financing or lease because their spouse or partner plans to be the primary insurer and driver of the vehicle.

In simple terms, the moment you co-sign a debt for someone else you have become responsible for paying it back. Although you can try to negotiate with the lender to remove your liability for a loan you have co-signed, for example, if another person is willing to replace you as the co-signer, or if most of the loan has already been repaid, but there are no guarantees this will be successful.

No matter what type of debt you’re considering co-signing, it’s important, above all, to consider whether you would be able to repay the entire debt if they other person didn’t – particularly if the entire balance was demanded immediately. We’ve seen a number of insolvency proceedings that were triggered simply by a co-signed obligation that the individual had never thought would impact them directly.

Learn more about Personal Debt Consolidation

Spousal Debts

Relationships alone do not create a legal obligation for paying someone else’s debts. Spouses will only have a shared responsibility for each other’s debts by:

• Specifically co-signing/co-borrowing or guaranteeing debts together; or
• Separating/divorcing and having debts split under BC’s Family Law Act.

A creditor cannot simply turn to a related party for payment – but if you co-sign a debt with a spouse, child, parent, other family member (or virtually any other party), you are creating a personal commitment to that creditor where one would not otherwise exist.

Learn more about Debt Liability for Couples & Families

Personal Financial Help

Many people who might generally avoid “financial attachment” with another person will decide to make exceptions in certain circumstances, such as when a close friend or family member is facing financial difficulties. Common examples of offering personal financial help might be gifting or lending personal funds or even co-signing on a consolidation loan. Although the intentions may be admirable and generous, when it comes to getting debt help from personal resources it’s important to note the following:

• Personal or family-driven funds are often a temporary fix for a larger problem and accepting money from friends or family can cause friction and emotional distress in the event they can’t be repaid as intended.
• Qualifying for a consolidation solution that requires borrowing can be difficult if you don’t have a strong credit score and/or major asset to pledge…or a co-signer, which as we’ve discussed is simply giving the creditor more pockets to reach into if the debt is not paid.

Family/friends can provide invaluable emotional support, especially when one is facing challenging times (financial or otherwise). Just as it is almost never advisable to co-sign debts with another person to begin with, it is almost certainly never a good idea to involve friends/family financially or legally if you need help with a debt problem.

When it comes to practical solutions and understanding your legal rights and remedies in difficulties with debt you need professional guidance to ensure you avoid potential minefields that can make the situation more difficult to resolve. Licensed Insolvency Trustees are the only debt professionals legally empowered and endorsed federally and provincially to assist individuals with debt management solutions. There is no cost to connect with a Licensed Insolvency Trustee to discuss your situation and assess all the options available to you to resolve your debts.

Preparing for Your Consultation with Sands & Associates

Consolidation Without Borrowing or Requiring a Co-Signer

Consolidating debt can be a good strategy to streamline payments and make debt payments more affordable. If you find yourself in a position where you are considering a consolidation solution to manage your debts, a better option may be consolidation without borrowing by filing a Consumer Proposal. As outlined below:

• Consumer Proposals can successfully consolidate all your debts (even government debts) without borrowing, interest charges or added fees.
• In addition to consolidating your debt a Consumer Proposal usually also cuts how much debt you need to repay down to an affordable amount, and monthly payments can be considerably lower than a consolidation loan or even a non-profit credit counselling program.
• Your credit score and history in no way impact your eligibility for consolidating debt with a Consumer Proposal and no co-signer or guarantor is needed.

If you or someone you know is having challenges managing debt or feeling debt-stressed, we encourage you to seek professional advice from a Licensed Insolvency Trustee and take some time to learn about and understand all your debt management options. When connecting with a Licensed Insolvency Trustee, you can rest assured that:

• Free, confidential consultations may be done online or over the phone.
• You are under no obligation to commit to any process or sign any official documents.
• Legal debt solutions including Consumer Proposals and personal bankruptcy may be filed and served to your creditors online.

Get your financial fresh start and relief from debt-stress with professional support from caring non-judgmental experts – book your free confidential debt consultation with Sands & Associates today.

^{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 Co-Signing Debts appeared first on Sands & Associates.

When you or your loved one is in debt, it can be difficult to seek professional debt advice or information about potential resources if you are feeling overwhelmed or embarrassed about your situation. Many people fear that their personal debts may turn into larger family financial issues if they are not able to pay off their debts, either as planned, or before they pass away.

What Canadians need to understand is that relationships alone do not create an automatic responsibility when it comes to repaying someone else’s debts. Read on to learn more about what can impact a person’s liability for someone else’s debts, and where you can get debt help in BC.

When is Your Spouse Responsible for Your Debt?

Getting married or having a common-law relationship does not mean that partners have assumed legal responsibility for each others’ debts – this is a very common myth. Unfortunately, many people misunderstand their legal obligations to creditors and consequently make financial decisions without understanding the facts of the situation that may result in a worse outcome than if they were fully aware of all of the rules surrounding debt in BC.

Relationships alone do not make you legally obligated to repay someone else’s debt, but a responsibility for debts may be triggered by:

• Specifically co-signing on or co-borrowing debts together; or,
• Debts being divided as part of a separation or divorce pursuant to BC’s Family Law Act.

What’s more, it’s important to understand that although your relationship alone does not create a debt obligation, a spouse or common-law partner can be impacted by certain actions of their partner’s creditors in the event their spouse is unable to meet their repayment commitments. One common example of this ‘bystander effect’ is where a couple holds a joint bank account at the same financial institution at which one owes a debt, and that creditor exercises their “right of offset” by withdrawing money they are owed from the joint account.

Coping with money issues in relationships can be incredibly challenging, and the stress is often compounded by a lack of awareness of your legal rights and remedies when it comes to debt. A Licensed Insolvency Trustee can help you understand your responsibilities when it comes to debts and can work with you on a plan that will allow you and your family to get a financial fresh start.

“[I] did not understand that I could have declared bankruptcy and settled my debt separate to my spouse while married and then only he would have remained in debt. I believed we both had to declare at the same time if we were married and shared the debt.”

– What were the reasons you waited to seek professional debt help? | 2020 BC Consumer Debt Study

Family Money Problems

Just as your spouse or common-law partner is not legally responsible to your creditors for paying your debts (unless they are a co-signer/co-borrower), neither are other family members responsible solely by virtue of being related to you.

Not having co-signed or joint debt with another person is the single best way to avoid transferring responsibility for debt and avoid someone else personally “inheriting” your debt. What many people do not realize until it’s too late is that the easiest thing you can do to give a creditor additional means to recover their debt is to co-sign or co-borrow debts with another party. We’re often asked when it may be a good decision to co-sign a debt for another person – our answer is ‘almost never’.

Co-Signed and Joint Debt

Proceed with extreme caution before you agree to co-sign or co-borrow with another person or business. Although your intentions may be good, and the intentions of your co-borrower are to make all of their payments as needed, life happens and unexpected events can create unanticipated financial challenges.

Co-signed/joint debts come in many forms, including loans, credit cards, leases, mortgages and more. By co-signing on a debt with someone (related or not) you become equally responsible for paying back 100% of the full balance due if the other person does not pay.

It’s important to note that:

• ‘Joint and several’ liability means each borrower in the loan or agreement is responsible for the entire unpaid balance, not half.
• Some borrowing agreements may even contain an ‘acceleration clause’ which allows the creditor to demand the full balance be paid immediately if a borrower breaks any part of the agreement, like missing payments.
• Credit card terms may vary depending on the lender. Always read applications and agreements carefully to be clear on what each cardholder is responsible for; do not assume secondary cardholders have a lesser responsibility for the total balance, regardless of who made the original purchases.
• Be especially cautious during the purchase or lease of a vehicle – many people simply do not realize the full commitment they are making on a joint obligation because their partner plans to be the primary insurer and driver.

Read an Overview of Seize or Sue and Vehicle Loans in BC

Co-signed and joint debt often adds a stressful emotional layer in challenging financial situations. A Licensed Insolvency Trustee can help you resolve your debt issues and ultimately stop the ongoing negative effects that financial stress may be having on important relationships in your life.

Debts and Divorce

Although you are not undertaking a legal responsibility for repaying your spouse or common-law partner’s debts upon marriage or cohabitation it’s important to be aware that separation or divorce can trigger a division of ‘family debts’ in BC. BC’s Family Law Act defines family debt as financial obligations a spouse incurred:

• During the period when the spouses’ relationship began and ending when the spouses separate; and
• After the spouses separate, if incurred for maintaining family property.

Family debts may include mortgages, personal loans from individuals, overdrafts, lines of credit, credit cards, income tax debt and more. Upon separation, family debts are shared equally unless:

• You and your spouse have made a different agreement about dividing debt between you; or
• A judge orders a different division of family debts.
  • This may be ordered in situations where an equal division may be “significantly unfair”.

Regardless of the outcome of your separation or divorce, the creditor who is owed the debt will still consider the person who signed for the debt responsible for repaying it and will seek payment as per the lending agreement/terms. Creditors can only collect on the debt from the borrower, even if the debt is “divorce divided”.

An insolvency proceeding such as a personal bankruptcy or legal consolidation with a Consumer Proposal can relieve a spouse of their obligation to repay their “divided portion” of family debt.

While filing bankruptcy or making a Consumer Proposal can consolidate virtually all types of debt, or even have most debts forgiven – there are two exceptions to this, pertinent to divorce-debts, where these debts would survive and remain payable:

• Outstanding child support balances; and,
• Outstanding spousal support balances.

In the event of a bankruptcy or Consumer Proposal, payment requirements for ongoing child support or spousal support would continue to be made as per usual throughout either a personal bankruptcy or Consumer Proposal process.

What Happens to Your Debt When You Die?

The death of a loved one does not transfer their debt to someone else personally. As outlined below in more detail:

• A co-borrower’s obligation for repaying joint or co-signed debts will remain, but if a person was not responsible for your debts when you were alive, they will not become responsible upon your death.
• If you have unpaid debt when you die, your creditor can try to make a claim on your estate, meaning that the proven debt may be paid from proceeds of your estate (if any).

“Since realizing that I was not legally responsible for debt solely in my late husband’s name, I would have paid my own debts first and been debt-free when he died. I would not have been happy to leave his debts unpaid, but I would have been under far less financial pressure.”

 – Knowing what you know now, what is one action you would have done differently in managing your debt? | 2020 BC Consumer Debt Study

Will my Children Have to Pay my Debt When I Die?

Many people think that their children may become responsible for taking on their payments to creditors in the event they pass away. This is untrue – neither children (nor spouses or other family members) inherit a personal liability for paying your debt when you die.

Knowing is not owing! Managing your estate planning is best done with the help of a BC lawyer who specializes in wills and estate planning. If paying off debt is a priority for you, a Licensed Insolvency Trustee can work with you on a plan to successfully get you to debt-free at any stage of life.

Getting Professional Debt Help

It is important that each person has a clear understanding about their personal debt obligations. If you are worried about how to manage your debts, are unsure as to your responsibility for repaying a debt, or are struggling with debt-stress, the best thing to do is connect with a BC Licensed Insolvency Trustee.

A Licensed Insolvency Trustee will offer multiple options to protect you and your assets and can assist you and/or your spouse in paying off debts in a timely and affordable way, or alternatively having debts written-off and forgiven by creditors.

Risks of Self-Assessing Debt Solutions

Interpreting the laws around consumer debts can be complicated, and many people misunderstand their rights and responsibilities when it comes to dealing with debt. Unfortunately, some of the steps people often take in attempting to remedy a money problem can sometimes make the problem worse or create a new issue. Common examples of this include:

• Assuming responsibility for a debt for which there is in reality no personal legal obligation to repay
• Being pressured into making unnecessary payments or payment agreements by collection agents
• Incorrectly assuming certain debts cannot be legally consolidated or forgiven
  • This commonly occurs where people are dealing with government debts like income taxes, student loans, etc.
• Engaging the services of high-cost or unlicensed debt help agents
  • Both for-profit and non-profit credit counsellors may promote their services over other options as they receive money from creditors (a percentage of the debt they recover from your settlement).
• Depleting RRSPs in attempt to protect them from creditors
  • BC residents are entitled to automatic protection on several different assets, including a comprehensive exemption allowance for RRSPs.
• Involving family members through transfers of assets, preferential payments or otherwise
  • In addition to creating a shared debt obligation from co-signing, certain actions may unintentionally have consequences for family members who end up involved with your debts. For example, Canada Revenue Agency may issue “third party assessments” against property recipients in certain situations, to collect on a debt owed by another individual.

Learn about Ways to Have Government Debts Forgiven

Licensed Insolvency Trustees are the only debt help professionals fully endorsed and qualified by the federal and provincial government and can help you to:

• Understand your specific situation, mapping out your needs and goals
• Assess all options available to deal with your debts
• Consolidate virtually all types of debt, including government debts, without borrowing, interest or added fees
• Have debt cut down to an affordable amount with lowered monthly payments
• Stop creditors from taking action against you for payment
• Get all your debt fully forgiven

Anyone can access debt resources via a Licensed Insolvency Trustee confidentially to discuss their personal situation and get advice. You are under no obligation to commit to any formal debt management proceeding and there is no cost to connect and get assistance.

Impact to Your Spouse of Bankruptcy or Consumer Proposal

Many people considering a formal debt management solution such as a personal bankruptcy or Consumer Proposal worry about a potential impact to their spouse or family. The good news is that not only can you take steps to legally deal with your debt independently of your spouse, but your decision to claim bankruptcy or make a Consumer Proposal does not transfer responsibility of those debts to your spouse either.

• If your spouse is not a co-signer/joint borrower on your debts, then they will not be impacted by your bankruptcy or Consumer Proposal.
• Your spouse does not become responsible for completing any duties or payments agreed to under your personal bankruptcy or Consumer Proposal.
  • In some cases, a person’s spouse or partner may not even be aware that the filing is happening.

Learn more about What Happens If Your Spouse Is Filing for Bankruptcy

Even though your spouse may not have a legal responsibility for your debt, sharing a household often means financial stress is felt by everyone. We know that struggling with debt can bring a lot of shame and guilt. Sands & Associates is here to help you and your family get back on track – no judgment, just solutions.

Solutions to Deal with Joint Debts

Being in a position where you hold joint debts with your spouse, child, parent or other party, and one or both of you are having difficulty maintaining payments can feel overwhelming. Fortunately, there are options that can help address joint debts such as non-borrowing consolidation with a Consumer Proposal or declaring bankruptcy.

No two situations are exactly alike, and it is important to evaluate all potential options that can address both individual debts and joint debts that may be involved.

• If spouses (or other close parties) have a substantial amount of debts in common, it may be advantageous to file a joint Consumer Proposal together to manage both parties’ debts. This would allow all debts of both partners (joint and otherwise) to be consolidated into a single, reduced monthly payment with no added interest or additional fees.
• There is no legal requirement for both parties (even spouses) to undertake the same debt management solution.
  • For example, one spouse might file for personal bankruptcy to have all their debts forgiven, while their spouse repays the joint debt. Or one spouse may make a Consumer Proposal to consolidate and cut their debt payments while the other spouse chooses bankruptcy relief.
• Should few (or no debts) be held together then separate solutions to address individual debt problems may be more appropriate.

A Licensed Insolvency Trustee can help you understand all your options to manage debts so you can choose the best way forward for you and your family.

Non-judgmental support, and solutions that can offer you a financial fresh start. You deserve to live with dignity, and without debt and its overwhelming stress. Book your free confidential debt consultation with Sands & Associates today.

_{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 “It’s All Relative”: Understanding Debt Liability for Couples & Families appeared first on Sands & Associates.

Sands & Associates Licensed Insolvency Trustee Blair Mantin joined BT Vancouver to talk about one of the biggest impacts consumers feel with a financial problem, when debts are piling up – debt-stress – and to share insights to help British Columbians manage the emotional side of money.

Watch the clip here and read more below:

Common Debt-Stress Impacts

Debt-stress can manifest itself severely, and in fact ‘overwhelming stress’ was one of the top indicators for participants in the 2019 BC Consumer Debt Study to realize that their debt was becoming a problem. Additionally, the study found that:

• Nearly 90% of respondents said they experienced a constant or daily worry about their debts or general finances.
• Many people said they were sleeping poorly, having arguments with their spouse or partner about money, and alienating themselves from family or friends.
• Over 70% said their self-esteem suffered because of being in debt, and 65% said their health suffered; many also felt their family or children, and job performance suffered.
• Anxiety or depression was cited as a debt-stress impact by 77.1% of respondents.
• Nearly 1 in 5 people even said the stress of their debt resulted in them experiencing thoughts of suicide.

You are not alone! Non-judgmental support and debt solutions are available from professionals at Sands & Associates. Connect with a debt help specialist today.

Get More Insights from the 2019 BC Consumer Debt Study

Tips to Manage Debt-Stress

If you are beginning to feel stress or anxiety about your finances, one of the first things you can do to try to regain control and make positive changes is to:

1. Identify and Acknowledge Your Debt Stress Triggers

Is there a specific aspect of your financial situation that is causing you worry? Some people might be stressed about a credit card balance that keeps growing, or a bill they cannot seem to pay off.

• Try to identify what specifically you are worried about and recognize what is triggering the stress for you – this also gives you some idea as to what needs to be addressed to solve the challenge.

Consider how you cope with this stress so you can be on the lookout for and avoid unhelpful (or further aggravating) coping habits. Some common areas to watch for might include:

• Are you avoiding looking at your bills? Hiding account balances from your spouse or partner?
• Turning to coping strategies like overeating, substance abuse, overspending or gambling?
• Neglecting your health or “punishing” yourself with negative self-talk or behavior?

2. Put Plans in Writing and Keep Track

Many people do not have a written personal budget or overall financial plan to refer to. Take some time today to get in “paperwork shape” and restore some feelings of control – this will help you manage your money more efficiently by avoiding the stress of “the unknown” and simply guessing. Start by:

• Listing all your debts, with account balances, account numbers and the payment requirements;
• Ensuring you have a realistic household budget that balances, and commit to sticking to it; and,
• Keeping track of your income, and your actual spending.

If you have a spouse or partner get them involved in this planning too. Many people are surprised to learn just how much their spouse has been shouldering alone when it comes to organizing the household finances; it’s important to get on the same page, and have financial goals you can work towards together.

Remember: No one is born with money management skills – these things take time to learn and understand (and often some trial and error).

Read some Frequently Asked Questions about your Spouse Filing for Bankruptcy

3. Tackle Other Financial Items One Step at a Time

As you move towards new habits, take note of other lingering financial “to do’s” that can cause anxiety. Do you have any financial-related tasks you are always meaning to get to? Common examples include:

• Overdue tax returns that should be filed;
  • Bump outstanding tax filings up your priority list – you could be missing out on benefits you are entitled to, or risking Canada Revenue Agency to prompt you to file.
• Looking into life insurance or setting up a Tax-Free Savings Account (or other retirement plans); and,
• Having a will written.

Keep track and celebrate your progress as you get these (often long-lingering) tasks completed. This will help you to keep up the momentum and sense of accomplishment.

Learn About Solutions for Having Government Debts Forgiven

4. Seek Professional Assistance

Many people prolong debt-stress and anxiety because they delay seeking professional debt advice, trying instead to manage on their own. Some other common reasons people postpone getting debt help include:

• Feeling ashamed of needing help with financial commitments;
• Worry about being judged, or feeling embarrassed to ask for help; and,
• Thinking there is no solution to their situation, or not knowing where to seek help.

Licensed Insolvency Trustees are the one debt help professional legally empowered and endorsed by the government to offer advice about your situation – and solutions to deal with debt for good. There is no cost to connect to get direction and talk about how you could move forward financially, and it could take less than an hour to get your debt-free plan.

Whether you are starting to worry about your debts, have felt underwater for some time, have a “perfect” credit score or are facing collection actions – we are here for you, without judgment.

We often have consultations with people who ultimately don’t require professional debt solutions but finding out about another avenue of debt legislation or even just professional confirmation that they’re on the right track gives them the support and tools they need to move forward financially. Knowing is not owing!

Connect with a caring Sands & Associates representative and get a plan to be debt-free today. Book your free debt consultation now.

The post Tips to Help Manage Your Debt Stress appeared first on Sands & Associates.