When and Why Would I Work with a Licensed Insolvency Trustee? 

A Licensed Insolvency Trustee is a legally qualified and federally endorsed debt solution expert. We are Canada’s only official debt help professionals, and if you are facing a challenge in managing your debts, we are the best people to turn to. We assist people who have many different needs and circumstances, such as:

• You’re worried about or struggling with debt, be it your monthly payments, or how to effectively pay your debt off.
• You want professional advice or support in making a plan to repay your debt.
• Your payments have fallen behind (or are about to), and/or accounts have gone to collections.
• You are dealing with a difficult creditor or aren’t sure if a debt is still collectable.
• You want to understand the resources available to help you manage or restructure your debt.
• You are seeking debt relief or forgiveness for debt you can’t afford to repay.

Learn More About the Qualifications and Regulations Licensed Insolvency Trustee Have

What Does a Licensed Insolvency Trustee Do for Me? 

A Licensed Insolvency Trustee’s job is to help people resolve their debt problem, and this may be achieved through multiple solutions. What we’ll first do is have a free, confidential consultation together to better understand your situation, and review all your options.

During this meeting, which can take place in person, over the phone, or online, a Licensed Insolvency Trustee will focus on explaining your rights and remedies so you can better understand your situation, and all the options available to you, including:

• Resources and strategies you can incorporate into do-it-yourself debt repayment, and how to prioritize your debts.
• Refinancing options, informal credit counselling services, and their pros and cons.
• Consolidating and cutting debt using an interest-free Consumer Proposal.
• Debt forgiveness through declaring personal bankruptcy.

In less than an hour you will have clarity on your situation, and an outline of next steps in the plan you decide to move forward with. If you would like to continue working with a Licensed Insolvency Trustee on a debt solution that we offer (typically a Consumer Proposal, or bankruptcy), we’ll set up a further meeting to work on the next steps together.

Preparing for Your First Meeting with Sands & Associates

How Does a Consumer Proposal Work? 

Consumer Proposals have become the debt solution of choice for people who want to legally consolidate and cut their debt and have many benefits that can dramatically reduce both your debt repayment costs and the time required to get your debts cleared. Here is a basic outline of how to consolidate your debt with a Consumer Proposal:

• Working with a Licensed Insolvency Trustee you’ll come up with a formal offer to pay your creditors the portion of your balance that is affordable for you.
• Your total debts will be combined in this one consolidation plan, and you’ll usually make monthly payments through your Licensed Insolvency Trustee until the Proposal amount you’re offering has been paid.
  • Virtually all of your debts can be included in a Consumer Proposal – everything from credit cards to payday loans, CERB overpayments, Canada Revenue Agency tax debts, student loans and more.
  • Debts can typically be cut by as much as 50-80% and you can take up to five years to complete your Proposal payments.
  • Your creditors will agree to write-off the unpaid balance at the end of the Consumer Proposal.
• In a Consumer Proposal your debts become ‘frozen’ and because this legal solution is not a loan, you won’t be charged any further interest by your Trustee or creditors as you work through the payments.
  • Your creditors will not be allowed to continue any collection or legal action, and they can’t change their minds and ask you for more money once the Proposal is in force.
  • Your assets and income are protected by your Consumer Proposal.

How Much Debt will a Consumer Proposal Eliminate?

What Role Does a Licensed Insolvency Trustee Have in a Consumer Proposal? 

Your Licensed Insolvency Trustee has several main duties in your Consumer Proposal, including:

• Developing your Consumer Proposal and managing all administrative requirements.
  • Preparation and filing of legal documents needed to start and conclude your Consumer Proposal.
  • Issuing you a formal “Certificate of Full Performance” once your Consumer Proposal terms have been completed.
• Dealing directly with your creditors, so you don’t have to.
  • Notifying your creditors of your Consumer Proposal, and if needed, negotiating with them.
  • Coordinating your payments and making the distributions to your creditors.
• Providing you two private, one-on-one financial counselling sessions.

Your Licensed Insolvency Trustee (or Insolvency Estate Manager) will also be available for support to you throughout the course of your Consumer Proposal, which can be over a period up to five years.

Learn More About the Steps to Consolidating Debt with a Consumer Proposal

How Does Personal Bankruptcy Work? 

If you’re unable to repay your debts and a Consumer Proposal isn’t a good option, bankruptcy is another legal debt solution governed by the Bankruptcy and Insolvency Act in Canada that allows you to get debt relief, and have your debts written-off by creditors – completing a personal bankruptcy can have virtually all your debts forgiven.

• No creditor can prevent you from seeking the relief and protection of bankruptcy if you find yourself unable to repay your debt, and you don’t need get a court’s permission or give up all your assets.

After you declare bankruptcy, you’ll work on completing some basic duties to receive your official release (discharge) from bankruptcy – this usually happens nine months after the start of your bankruptcy. These duties you’ll have to complete generally include:

• Completing two private one-on-one financial counselling sessions.
• Submitting a monthly budget form called a “statement of income and expenses”.
• Supplying the tax return information for the year you start bankruptcy, as these filings will be done by your Trustee.
• In most cases you’ll pay a minimum administration fee, usually $2,700 broken into payments throughout your bankruptcy.

Learn Why Most People Keep All their Assets in Bankruptcy

What is the Role of a Licensed Insolvency Trustee in a Bankruptcy? 

You can access bankruptcy services only by working with a local Licensed Insolvency Trustee, and there are some key functions your Licensed Insolvency Trustee will fulfill in a bankruptcy. Your Licensed Insolvency Trustee will:

• Prepare the legal paperwork you will sign to officially declare bankruptcy and manage the administration requirements throughout the process.
• Deal with your creditors, including reviewing their claims and managing their inquiries.
• Issue your official ‘Certificate of Discharge’ and complete the required administration tasks to conclude the bankruptcy.

As with a Consumer Proposal, your Licensed Insolvency Trustee (or Insolvency Estate Manager) is available for ongoing guidance and support throughout your bankruptcy.

Debt Forgiveness with Personal Bankruptcy: Step-by-Step

How Does a Licensed Insolvency Trustee Get Paid for a Consumer Proposal? 

The fees that a Licensed Insolvency Trustee gets for the work they do in a Consumer Proposal (or bankruptcy) are all regulated. Licensed Insolvency Trustees can’t set their own fees, and there is no hourly ‘fee for service’ – there are tariffs set by the federal legislation that are followed in all insolvencies filed in Canada.

To explain it in the simplest terms, in a Consumer Proposal you only pay whatever you are offering your creditors – no fees or interest charges are added on. For example:

• If your Consumer Proposal offers your creditors $10,800 total, which you will pay by monthly payments of $300 for 36 months – you pay $300 a month for 36 months, that’s it.
• The Trustee’s payment is calculated based on the amounts you pay and deducted from the funds your creditors get. This all-inclusive payment also covers costs such as: the government filing fee, financial counselling sessions, Personal Property Registry Search charges, and other incidental costs.

Why We Don’t Collect Upfront Payments When You Start a Consumer Proposal

Although all Licensed Insolvency Trustees offer free consultations and must follow the same rules and calculations for their fees, you may find some different approaches as to when you would make your first payment. At Sands & Associates, our approach when it comes to your payments is generally this:

• You’ll make your first monthly Consumer Proposal payment sometime in the first month after your Consumer Proposal has been officially filed, and then continue with your monthly payments from there. Again, all you pay is your one monthly payment – there are no added fees, hidden costs, or interest charges.

We don’t collect any upfront payments when you are starting your Consumer Proposal because we understand if you are coming to us for help with a debt problem, you would probably benefit from some breathing room before you begin your Consumer Proposal payments. This is just one of the ways our approach is different – we are proud to be ‘debt smart with heart’.

Is a Consumer Proposal Right for Me?

Are There Alternative Debt Help Providers in Canada?

Licensed Insolvency Trustees are Canada’s only official debt help providers – qualified, endorsed, and fully regulated at a federal level. Unofficially, there are individuals and organizations who offer various debt services to Canadians – you may come across debt consultants, debt settlement agents, credit counsellors, and more. These are all unlicensed providers, and they cannot offer you legal protection or solutions that allow you to have debts forgiven in the same way that a Licensed Insolvency Trustee can.

• Consumers need to be very cautious when it comes to alternative debt help providers and know that if you decide to work with a representative other than a Licensed Insolvency Trustee there can be significant risks in doing so, and often little recourse if you have problems.

Being a Licensed Insolvency Trustee means committing to a high-standard code of ethics and standards of professional practice, with a responsibility to perform all our functions with honesty and integrity. When it comes to debt help, reach out to a Licensed Insolvency Trustee – even if it is for a second opinion.

Our job is to help you solve your debt problems, and we’re here for you without judgment. 

Get confidential advice, explore all your options with a qualified professional – and get a debt-free plan that’s right for you. Book your free consultation with Sands & Associates today.

The post Working with a Licensed Insolvency Trustee – What to Expect appeared first on Sands & Associates.

Since 1990 Sands & Associates has helped thousands of BC residents get a financial fresh start, and we understand that many people worry about whether there are hidden costs involved when it comes to debt help services. Read on to learn more about the laws that determine how Licensed Insolvency Trustees are paid when you work with one to make a Consumer Proposal or file a personal bankruptcy in BC.

How are Licensed Insolvency Trustee fees determined?

There are set calculations and rules that all Licensed Insolvency Trustees must strictly follow when administering a personal bankruptcy or Consumer Proposal. Trustee fees are calculated and drawn from the funds that have been paid into each individual bankruptcy estate (proceeding) or Consumer Proposal. Licensed Insolvency Trustees are not allowed to simply set their own fees and rates.

In most bankruptcies and all Consumer Proposals, the Licensed Insolvency Trustee’s fees are based on a tariff set by the federally legislated Bankruptcy and Insolvency Act. Unlike other professionals, such as a lawyer for example, working with a Licensed Insolvency Trustee is not a “fee for service” – this means that a phone call to discuss any questions you have, or get ongoing support throughout the process won’t result in an invoice coming your way.

How much do I have to pay to file bankruptcy?

If after meeting with a Licensed Insolvency Trustee or Estate Manager it is determined that your income falls in a range that indicates you do not have any surplus income requirements and you have not been bankrupt before, generally you could expect to pay $2,700 for a personal bankruptcy administration.

Since most people are not able to pay the entire cost of bankruptcy upfront, this will usually be broken up to make it manageable, with monthly payments of $300 during the nine-month period of bankruptcy.

How Much Does it Cost to File Personal Bankruptcy? Read More

In situations where a person’s income would allow them to repay a meaningful portion of their debts and avoid filing a bankruptcy, a Consumer Proposal debt consolidation is often a more appropriate debt solution.

How much do I have to pay to make a Consumer Proposal?

Because Consumer Proposals themselves vary depending entirely on the circumstances of the person filing there isn’t a straight-forward dollar figure when it comes to a monthly payment. The tariff-based Consumer Proposal fees are drawn from whatever your creditors stand to realize under the actual Consumer Proposal. What this means is that the cost is essentially borne by the creditors and there is no additional payment needed from the person making the Consumer Proposal other than the amount that is offered as repayment on the debts via the Consumer Proposal itself.

For example, if your proposal is for $300 per month for 36 months, then you just need to pay the first $300 payment at the time of filing your official Consumer Proposal documents and this counts towards the total amount you need to pay. Afterwards you just continue making the payments until the proposal is paid off in full. There is no separate amount due and payable to the Trustee at any point.

How Much Debt Will a Consumer Proposal Eliminate? Read More

Costs Included

During the process of personal bankruptcy or a Consumer Proposal there are other costs and fees that need to be paid – these are paid directly by your Licensed Insolvency Trustee and covered as part of any monthly payments you may make. These may include:

• Government filing fees to formalize bankruptcy or Consumer Proposal;
• Financial counselling sessions;
• Preparation and filing of income tax returns;
• Personal Property Registry Search charges.

Statement of Receipts and Disbursements

The final accounting prepared by a Licensed Insolvency Trustee is called a “Statement of Receipts and Disbursements”. This document details all moneys received and paid in each bankruptcy or Consumer Proposal proceeding and is reviewed and approved by the Government of Canada branch that regulates Licensed Insolvency Trustees. Before a Licensed Insolvency Trustee is paid they must have received approval from the Office of the Superintendent of Bankruptcy.

A copy of the Statement of Receipts and Disbursements is provided to the individual, as well as creditors who have a claim in their bankruptcy or Consumer Proposal. This process is an integral part of legal debt help legislation and works to ensure complete transparency for consumers.

Example of Licensed Insolvency Trustee Fees in a Personal Bankruptcy

The exact rules that control how Licensed Insolvency Trustee fees are determined in most personal bankruptcies can be found here. Below is a basic breakdown of these approximate fees and costs, as you might see on a Statement of Receipts and Disbursements:

$2,700 – Paid over nine-month period of personal bankruptcy by the individual filing bankruptcy

Paid to Licensed Insolvency Trustee:

• $100 Administrative Allowance
• $170 Counselling Session Costs
• $1,684 Licensed Insolvency Trustee’s Allowable Fee

$1,954 – Total Paid to Licensed Insolvency Trustee

Other Charges Paid:

• $86 Federal Government Filing Fee Paid
• $215 Levy Paid to Office of the Superintendent of Bankruptcy
• $98 Government GST Payable
• $347 Possible Creditor Distribution

Total: $2,700

In accordance with bankruptcy legislation, in the above example (and most cases) the $2,700 takes into account all the services provided to you by your Licensed Insolvency Trustee and their support team.

Get the Facts About Filing a Bankruptcy or Consumer Proposal

It’s important to understand the processes of bankruptcy and Consumer Proposals by sitting down with a Licensed Insolvency Trustee directly. Legal debt solutions can be complex and the law is an ever-changing body of statutes and precedents. As no two situations are identical you need to gain information that is relevant and accurate to your specific situation and circumstances.

Be cautious of “facts” that you hear from non-Trustee professionals; while they may be well-intended, bank employees or collection agents for example, are not qualified to assess the situation of a person contemplating making a Consumer Proposal or filing bankruptcy.

Learn more about Getting Debt Advice

Debt-Free Solutions

Researching and comparing solutions to help you manage your debts can feel overwhelming. If you’re having financial troubles or want to manage your debts more effectively, speaking confidentially with a federally-Licensed Insolvency Trustee is a commitment-free, no cost way to get the facts and answers to your questions about debt options to help you get back on track with a financial fresh start.

From debt consolidation to Consumer Proposals to bankruptcy, you may have several debt solutions that could work for your individual situation. A Licensed Insolvency Trustee can help you assess your situation and evaluate all of your options during a free debt consultation, from there the choice is yours in how to move forward.

Move towards your debt-free future with confidence – book your free confidential debt consultation today and meet with a supportive non-judgmental debt expert from Sands & Associates in a local BC office near you.

The post How Does a Licensed Insolvency Trustee Get Paid? appeared first on Sands & Associates.

What Will it Cost Me to File a Consumer Proposal?

The fees of the Licensed Insolvency Trustee who files your Consumer Proposal are set by federal law and government tariff, and these fees include all the costs for completing the administration of your Consumer Proposal – start to finish.

• Because Licensed Insolvency Trustee’s fees are set by tariff, you will not be billed or invoiced – these fees are simply paid out of the money your creditors receive under the Consumer Proposal, and no additional cost is paid by you as the person who is making the Consumer Proposal.
• There is no interest charged on the debt consolidated in your Consumer Proposal.

How Do Monthly Consumer Proposal Payments Work?

The Consumer Proposal amount offered to your creditors will be based on several factors, including your income and overall debt, and you will make your monthly payments directly to your Licensed Insolvency Trustee.

• Your Licensed Insolvency Trustee will deal with your creditors on your behalf, and will periodically distribute payments to your creditors, in accordance with your specific Consumer Proposal terms.

For example: Your Consumer Proposal to settle total consolidated debts of $35,000 offers to repay a total of $10,800 to your creditors, which you will pay by monthly payments of $300 for 36 months. You would then pay:

• $300 within 30 days of signing and filing your official Consumer Proposal
  • No payments are required in advance of the filing – there are zero upfront fees
• $300 per month, for the remaining 35 months of your Proposal

In the scenario above, you would only have to repay around 30% of your total debt to have it considered settled in full, and interest charges and penalties from your creditors will immediately stop upon filing your Consumer Proposal.

All you need to pay in your Consumer Proposal is what you are offering to your creditors – costs of administration, and the Licensed Insolvency Trustee fee are essentially paid by your creditors.

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Transparency in the Consumer Proposal Process 

At the end of your Consumer Proposal, you and the creditors included in your Consumer Proposal will receive a final accounting document called a Statement of Receipts and Disbursements.

• This official document helps to provide full transparency and will detail all payments made through the Consumer Proposal and show a clear breakdown of the legal tariffs that were used to determine the Trustee’s fees and the government’s levy (charge).
• The Statement of Receipts and Disbursements will also detail the creditors that received debt settlement payments (called dividends) through the Consumer Proposal, and exactly how much each creditor received.

Find out how a Consumer Proposal could work for you, book your free confidential debt consultation with Sands & Associates today. We have a network of local BC offices to serve you online and in-person.

The post How Much Does it Cost to File a Consumer Proposal? appeared first on Sands & Associates.