How Do I Qualify for Bankruptcy Debt Relief?

Bankruptcy is a legal process intended to provide honest but unfortunate individuals relief from unmanageable debt and a financial fresh start. In Canada, there are few criteria that need to be met to qualify for the debt relief bankruptcy offers.

Whether bankruptcy is the best option will depend on the individual’s unique circumstances, but, in general, a person may be eligible to declare bankruptcy if they are insolvent and owe at least $1,000 of debt.

If you think it seems simple to qualify for bankruptcy, you’re right; Canada’s bankruptcy legislation (the Bankruptcy and Insolvency Act) is intended to give straightforward, accessible relief to people who need it.

• There is no requirement for you to be delinquent in your payments or to have a ‘low’ credit rating to consider bankruptcy for debt relief. In fact, most people who declare bankruptcy have never missed a payment and have a fair credit score.

Just because you meet the qualifiers for bankruptcy doesn’t mean this is your best – or only – option. For example, it usually wouldn’t make sense to file for bankruptcy if you only owed $1,000. When evaluating if bankruptcy is an appropriate solution, a Licensed Insolvency Trustee will take other factors into consideration too, including (but not limited to) your income, the amount of debt you have, and other specific challenges you may be facing.

In fact, most people who seek a Licensed Insolvency Trustee for bankruptcy services discover that making a Consumer Proposal to consolidate and cut their debts is actually a better option than filing for bankruptcy.

When is Filing for Personal Bankruptcy the Best Option?

How the Personal Bankruptcy Process Works in Canada

A person can be released from almost all their debts through bankruptcy and the vast majority of personal bankruptcies in Canada are ‘voluntary’ bankruptcies, which means that the person who is struggling with their debts seeks bankruptcy aid. It is extremely rare for an individual to be legally ‘forced’ into bankruptcy.

From there, your Licensed Insolvency Trustee will contact your creditors to let them know about your bankruptcy. By law your creditors will be required to:

• Freeze your debt balances and stop charging you interest.
• Refrain from contacting you for payment, and collections and any legal actions will also stop – this includes bank account freezes and wage garnishments (even from creditors such as Canada Revenue Agency).

You’ll begin working on a few key duties that will allow you to successfully complete and receive an official discharge (release) from bankruptcy. In most cases this takes only nine months from start to finish. You can generally expect to:

• Keep a monthly budget detailing the income and expenses of your household.
• Provide your Licensed Insolvency Trustee the information and documents needed to file your taxes for the year your bankruptcy starts.
• Have two private, one-on-one financial counselling sessions with a Qualified Insolvency Counsellor who works with your Licensed Insolvency Trustees.
  • These meetings are an opportunity for you to get support in a variety of financial areas like credit ratings, budgeting, savings and more.
• Pay the bankruptcy administration fee.
  • In most cases you could expect this to total $2,700 and most Licensed Insolvency Trustees will allow you to pay this via affordable monthly payments.
• Stay in contact with your Licensed Insolvency Trustee, letting them know if you move or your household experiences a significant change.

• Some common debts that will survive bankruptcy include outstanding and ongoing child support and alimony payments, court ordered fines, and student loans if you stopped being a student within seven years of your bankruptcy (special hardship provisions may be available if you stopped school within five years).
• If you had an ongoing mortgage or vehicle financing when you started your bankruptcy, you may have decided to continue making payments on these ‘secured’ debt(s) to keep the asset(s).
• There are specific federal and provincial laws in place to safeguard key assets, and most people keep all their assets in bankruptcy.

Bankruptcy Alternatives – Learn About Making a Consumer Proposal

If you owe $1,000 or more and want to get out of debt, bankruptcy could be one solution, but there may be others to consider. The same legislation (the Bankruptcy and Insolvency Act) that sets out how bankruptcy works also provides for another legal debt solution – a Consumer Proposal, the top bankruptcy alternative in Canada.

Consumer Proposals can be a great option over bankruptcy and consolidation loans, especially where a person can contribute some repayment towards their debts but is perhaps unable to repay their entire debt plus the ongoing interest charges. Here’s how a Consumer Proposal works:

During a free, confidential consultation with a Licensed Insolvency Trustee in your province, you’ll work together to discuss your personal circumstances and come up with a customized repayment plan that is affordable for you.

• A Consumer Proposal can consolidate virtually all types of debt, from credit cards to payday loans, lines of credit, overdrafts, and government debts like income tax balances, business GST, credit overpayments and more.
  • You can continue making payments on your car or mortgage outside of your Consumer Proposal if you wish to do so.
• You’ll offer to repay a portion of your debt that’s affordable for you over a period of up to five years, and your creditors will agree to forgive the unpaid balance and stop all future interest charges. You may be able to cut your debts by up to 50-80%, interest-free.
  • For example, if you owe $25,000 of debt your Consumer Proposal might be to pay $7,500 (30%) by way of monthly payments of around $210 for 36 months.

Compare Your Debt Options

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

• Most people will repay the 20-50% of their debts by making monthly payments, and the entire Consumer Proposal will be coordinated and administered directly by your Licensed Insolvency Trustee.
  • Like in bankruptcy, your creditors will no longer be able to contact you for payment or continue collection actions including wage garnishments.
• You’ll have the opportunity for two private credit counselling sessions focused on credit building, budgeting, etc. and your Licensed Insolvency Trustee will be available for ongoing support throughout the Consumer Proposal process.

What Debts Can a Consumer Proposal Consolidate? Learn More

Qualifying for a Consumer Proposal is also very easy – you’ll need to owe between $1,000 and $250,000 (not including mortgage debts) and be insolvent.

• If you’re filing a joint Consumer Proposal (together with your spouse for example), this limit doubles to $500,000.
  • For people who owe more than this a different type of Proposal is available, with some slight differences to the overall process.
• A Consumer Proposal is not a new loan or financing, so there is no credit check and your credit rating is not a factor at all. This is especially welcome news for people seeking consolidation options who may be otherwise hindered by a low credit score.

Get More Information About Your Debt Relief Options

If you’re facing financial challenges, the best thing to do is to talk with a Licensed Insolvency Trustee. During a non-judgmental, confidential, one-on-one meeting we’ll help you evaluate your situation and all possible debt solutions including but not limited to Consumer Proposals, bankruptcy, credit counselling and more. You’ll learn the ins and outs and decide on the course of action you feel is best for your circumstances.

• It’s important for consumers and business owners to understand that Canada has only one government-qualified and endorsed debt help professional – Licensed Insolvency Trustees, and the solutions we can help you access are the only options that can allow you to have your debts legally reduced and forgiven.
• You do not need a referral to speak with a Licensed Insolvency Trustee, and Licensed Insolvency Trustees across the country will offer you a free consultation to talk about your options. It should never cost you to money to talk about your debt solutions.

If you have been offered debt advice or even advised against a Consumer Proposal or bankruptcy by anyone other than a Licensed Insolvency Trustee, it is highly recommended to get a second opinion from a Licensed Insolvency Trustee. Laws and resources around consumer debts and debt solutions are ever-changing and it’s important you have the opportunity to find out the facts from a qualified debt expert.

Discover your debt solution and move forward with your life – book your confidential, free debt consultation with Sands & Associates today.

The post Do I Qualify for Personal Bankruptcy? appeared first on Sands & Associates.

What Professionals Offer Consumer Debt Management Services in Canada?

There are two types of debt help professionals in Canada: Licensed Insolvency Trustees and informal debt service providers, who may use many different titles.

• Titles like credit counsellor, debt advisor, or debt consultant are not regulated ‘professionals’ and anyone can use these names to purport to offer debt management and related services.

Licensed Insolvency Trustees: Established as Canada’s only official debt help professionals and the people who can administer legal solutions that allow you to have some, or all your debts forgiven.

• Common debt solutions and relief Licensed Insolvency Trustees provide to individuals include Consumer Proposals (a specialized type of non-borrowing consolidation where you can consolidate and cut your debt without interest or added fees), and personal bankruptcy for full debt forgiveness.
• With a Consumer Proposal you can avoid both bankruptcy and more borrowing – and:
  • Consolidate and cut virtually all types of debt, from credit cards to tax debt, CERB overpayments to payday loans, overdrafts, student loans and more.
  • Offer to repay what you can afford (often as little as 20-50% of your total balance) over a period up to five years, and creditors will agree to forgive the unpaid balance so you can move on with your life.
  • Pay no further interest, consolidation costs, or professional fees.
  • Legally protect your assets and stop creditors from pursuing you for payments (including garnishments and seizures by even government creditors such as Canada Revenue Agency).

Consumer Proposals are an advantageous debt solution of choice for people who may have previously considered filing for bankruptcy, or are looking at costly consolidation loans to manage their debt.

Credit Counsellors: May offer different types of debt help services through for-profit and non-profit organizations.

• Although they may include free education as part of their offerings and resources, credit counsellors charge for their debt management services (such as monthly debt repayment plans) and these costs may include: Fees for initial set-up, monthly maintenance, application, membership, and more.
• You may need to pay fees even if creditors refuse to negotiate or make a deal with you through your credit counsellor.

Debt Consultants: These agents may operate in a few ways, one by offering debt settlement services like a credit counselling repayment plan, another is by acting as an agent for a person who wants to work with a Licensed Insolvency Trustee on a Consumer Proposal.

• Some credit counsellors and debt consultants may say they are certified by an accreditation body, but there is no certification body in the debt advisory sector that is widely recognized or reputable.
• Agents may hold a business registration and pay license fees to operate as a debt repayment agency, but this is not the same as being part of a fully regulated profession.

Insolvency filings across the country are on the rise as consumers face a slew of financial challenges contributing to problem debt. At the same time, the Government of Canada has published observations about debt advisor services, flagging specific concerns about the risks unregulated advisors pose, especially where consumers are looking for Consumer Proposals and bankruptcy relief.

Should I Work with a Debt Settlement Agent or Credit Counsellor? What’s the Difference?

Misleading Debt Services Being Sold to Consumers

Over the years consumers have endured predatory unlicensed debt services such as scammy companies operating US-based debt pooling, shady agents charging huge upfront fees without results, misleading quick-repair credit rebuilding services and more. Unfortunately, official efforts to curb these issues take time to have an impact and sadly, many consumers suffer the adverse effects before then.

Issues that have recently caught the Federal Government’s eye involve the debt advisory marketplace, and its impact in the insolvency system. There are several concerns within the industry, including consumers being sold and charged for what may be dishonest and less than transparent services, including:

• Being referred to a Licensed Insolvency Trustee (“LIT”) by a third-party agent.
• Insolvency advisory.
• Consumer Proposal exit loans.
• Insolvency filing insurance.

Consumers do not need a third party’s services to safely access impartial advice and solutions through a Licensed Insolvency Trustee. If you hire another advisor for services related to your Consumer Proposal or bankruptcy, understand these are completely unnecessary add-on services, and offered by agents who are not qualified to administer the Consumer Proposal or bankruptcy for you. 

Consumer Proposals are not loans and require no insuring, they are a legal type of debt consolidation solution only a Licensed Insolvency Trustee can administer for you. If you are offered or encouraged to use any type of financing to complete a Consumer Proposal, understand this is not only unnecessary, but counter-productive to cost advantages of a Consumer Proposal (namely, consolidation without borrowing or interest and stopping previous interest charges from accumulating).

Am I Working with a Licensed Insolvency Trustee?

The best thing to do is simply ask “Are you a Licensed Insolvency Trustee?”. You can also use the Government of Canada’s “find an active Licensed Insolvency Trustee” directory, and if you’re located in British Columbia, Sands & Associates can help you.

• It is against the law for an agent to say they can manage a Consumer Proposal (or bankruptcy) for you unless they are a Licensed Insolvency Trustee.

If you’re looking for debt help online, be aware that advertising can be misleading – ‘government approved’ ‘licensed’ and ‘fast credit repair’ are all examples of this. Beyond options a Licensed Insolvency Trustee offers, there is no government debt ‘program’, and ‘quick credit repair’ simply doesn’t exist.

• A Consumer Proposal (or bankruptcy) can ONLY be filed through working with a Licensed Insolvency Trustee, and, as noted – you do not need any sort of referral to connect with a Licensed Insolvency Trustee to explore or start the process.
  • If you’ve been advised against a Consumer Proposal by anyone other than a Licensed Insolvency Trustee, you should get a second opinion from a Licensed Insolvency Trustee.
• Your credit rating is related to your credit history, and building a credit history that demonstrates responsible credit use simply takes time and careful habits, such as:
  • Paying all your bills on time.
  • Keeping credit balances under 50% of your total credit limit.
  • Having a consistent employment history.

Understanding Credit Reports and Scores in Canada – Learn More

Recap – Key Takeaways for Consumers Seeking Qualified Debt Advice

1. Most creditor counsellors and all Licensed Insolvency Trustees will offer you a free consultation to help you come up with a plan to manage your debts – but it’s essential to understand:

If you choose to take advice from or work with any sort of debt help professional other than a Licensed Insolvency Trustee, there are considerable gaps in regulations and consumer protection.

• In BC some provincial guidelines exist around people who charge a fee to negotiate with a creditor on your behalf, but, legally, anyone can provide debt management advice services, and there is no federal authority regulating people calling themselves credit counsellors, debt agents and the like.
• Credit counselling organizations are heavily bank-funded, and some may promote their plans over other options you have, as they make money from creditors, usually a flat percentage commission of the debt they recover. Remember: Non-profit does not mean a charity, and it doesn’t speak to quality or reputation either.

2. No referral is required to talk with a Licensed Insolvency Trustee and receive qualified free, confidential advice about your situation and all your options. It is highly recommended that you connect directly with a Licensed Insolvency Trustee local to your province.

• Licensed Insolvency Trustees are professionals who provide specialized debt support and debt management services under the authority of federal regulations and legislation, operating without the limitations of credit counsellors and other debt agents.

Dealing with a debt problem can feel overwhelming, but you are not alone. Whether you are interested in consolidating and cutting debt with a Consumer Proposal, debt relief through personal bankruptcy, or aren’t sure what options are available to you – you can turn to a Licensed Insolvency Trustee for support and virtually all debt-related questions and concerns. 

• We will walk you through all options to address your debts including (but not limited to): various repayment and consolidation strategies, supportive resources, credit counselling programs, Consumer Proposals, and bankruptcy.

Sands & Associates’ full suite of debt advice and debt help services is available to consumers at local offices throughout BC, as well as over the phone, or online video – whatever is most comfortable and convenient for you.

Talk with a local debt expert and get a personalized debt-free plan that’s right for you. Book your free, confidential debt consultation today.

The post Unqualified Debt Advisors – What Consumers Need to Know appeared first on Sands & Associates.

What Does it Mean to File for Bankruptcy in Canada?

Bankruptcy is a legal solution to help people get relief from and resolution for their debt. In completing the process of bankruptcy in Canada, a person who previously was unable to manage their debt can get a financial fresh start.

• Working with a Licensed Insolvency Trustee (the professional who will handle the bankruptcy administration and guide you through the process) you may be able to have virtually all your debts forgiven, including but not limited to debts from credit cards, payday loans, taxes, CERB overpayments, student loans and more.
  • No creditor or other party can prevent you from seeking the protection and relief of bankruptcy if you are unable to pay off your debt.
• Most often people complete the process of bankruptcy in only nine months, paying an administrative fee over this time, and completing some basic duties as part of the bankruptcy process.

Once you’ve officially filed for bankruptcy, this triggers what is called a ‘stay of proceedings’ which prohibits creditors from continuing to pursue you for payments, charging ongoing interest, taking collection actions, etc. Because of this stay of proceedings, bankruptcy offers immediate and powerful protection from your creditors, including stopping wage garnishments and other legal actions that can put your assets and income at risk.

Your Assets in Bankruptcy – Bankruptcy Exemptions in BC 

It’s true that most people filing personal bankruptcy in Canada keep all their assets, and this is because each province and territory has laws that specify assets that are legally exempt and therefore safe from seizure by creditors. Here in BC, asset exemptions set through the Court Order Enforcement Act entitle you to claim exemption amounts on the following assets, even when you can’t pay your debts:

• $4,000 for household furnishings and appliances (at resale or liquidation value, like what you could expect to get at a garage sale)
• Clothing and medical aids – up to an unlimited value
• $5,000 for a motor vehicle (this is reduced to $2,000 if you have an outstanding debt owing under Family Maintenance Enforcement Act)
• $10,000 for tools or other personal property used to earn income from your occupation, also known as tools of the trade (again, at a resale or liquidation value – not new or replacement value)
• $12,000 equity in your principal residence if you are within the Metro Vancouver or Greater Victoria area ($9,000 elsewhere in the province)

Inheritances and lottery winnings that you acquire before being released (discharged) from bankruptcy are examples of property that would not be exempt.

Compare Your Debt Options

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

Claiming Bankruptcy and Keeping Your Car (or Other Assets)

When it comes to larger assets like homes and vehicles, not only the value of the asset is considered, but also whether there is a secured debt owed against it and the resulting equity the person has in the asset (essentially the difference between the value of the asset and the value of the loan owed against it).

When it comes to a home or vehicle, many people don’t own these assets free and clear, and if the asset is subject to a secured debt, there are a few options to consider in bankruptcy:

• If you want to keep the asset you could decide to continue with the ongoing payment arrangement (or try to negotiate new terms) with your secured creditor.
  • If your mortgage (or other secured debt) payments are up-to-date and you want to continue with the agreement in place, these are not usually impacted at all by filing for bankruptcy.
    • If your current mortgage is in good standing, generally lenders will honour mortgage renewals that come due during the period of your bankruptcy.
• Or you could decide to walk away from the asset and ongoing financing arrangements altogether, and any equity above and beyond your exemption would be paid into your bankruptcy estate.
  • You may decide to sell the property through the bankruptcy, and each homeowner would be entitled to receive their exempt equity amount (up to $12,000 each) from the sale proceeds.
  • If foreclosure proceedings were underway and the secured creditor was taking possession, any shortfall from the subsequent seizure and sale of your home would be written-off as part of the bankruptcy.

What Do You Lose When You Declare Bankruptcy?

Bankruptcy isn’t meant to be a punishment, it’s a solution to help you solve unmanageable debt, and while assets that are outside the exemptions are intended to form part of your bankruptcy ‘estate’ and be available towards satisfying your debts – the reality is that even if you own something beyond the exemption allowances, non-exempt assets are often kept by individuals and there are a few ways of achieving this, such as by:

Paying in the non-exempt value of your assets to your bankruptcy estate – this is sometimes referred to as ‘repurchasing an asset’ even though you will physically retain it the whole time. For example:

• You own free and clear a vehicle appraised at a value of $8,000, and are entitled to a $5,000 exemption allowance, leaving you with $3,000 non-exempt equity. You could choose to keep the vehicle and pay in $3,000 to your bankruptcy estate by way of monthly payments.

Alternatively, the most common (and often best) way to keep virtually all your assets, while still getting protection from your creditors and a legal solution to manage your debt is to file a Consumer Proposal rather than bankruptcy.

• You will not automatically lose your home or other assets if you file for bankruptcy or make a Consumer Proposal. If you move forward with bankruptcy or a Consumer Proposal, the biggest (and often only) thing you have to lose is your debt!

What is a Consumer Proposal?

A Consumer Proposal is a unique legal debt solution that is considered an alternative to both consolidation loans and bankruptcy. Filing a Consumer Proposal allows you to consolidate your debt without borrowing and cut the amount of debt you must repay down to what you can reasonably afford.

• By making (usually) monthly Consumer Proposal payments administered by your Licensed Insolvency Trustee, many Consumer Proposals are successful in cutting debt by up to 50-70% – with no borrowing costs or added administration fees.
• With a Consumer Proposal you keep all your assets unless you specifically decide to end the ongoing financial commitment through the Consumer Proposal.
  • Like bankruptcy, when it comes to secured debts (a mortgage, vehicle loan, etc.) you have the option of keeping the payment arrangements in place if you want to keep the asset, or you could surrender the asset to end the ongoing obligation. (And if there’s a shortfall this could be included in the Consumer Proposal.)

How Much Debt will a Consumer Proposal Eliminate?

Confidential Debt Advice 

Understanding your situation and ways to deal with debt is best done with the help of a Licensed Insolvency Trustee. We are Canada’s only qualified debt help professionals and can assist you in exploring ALL possible solutions. If you’re struggling with unmanageable debt, or finding it difficult to pay down your debt, connect with a local Licensed Insolvency Trustee to have a free, confidential consultation about your options.

• There are many ins and outs to consumer debts and your rights, responsibilities, remedies can be complex. Avoid troubleshooting what can be a complicated legal subject, incorrectly disqualifying yourself from getting support and solutions, or unknowingly enlarging the problem – take an hour to find out the facts.

Licensed Insolvency Trustees are dedicated debt help professionals who offer impartial expert advice, and we understand how stressful financial troubles can be.

• Sands & Associates serves the entire province of BC, and you can get free, qualified advice and support from a non-judgmental professional in person at one of our local offices, over the phone, or over video chat – whatever is most convenient for you. No judgment, just support and solutions.

Talk with a friendly, local debt expert who cares. Book your free, confidential debt consultation with Sands & Associates today.

The post What Assets Can I Keep if I Declare Bankruptcy? 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.

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

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

Tax Debt

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

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

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

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

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

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

Medical Services Plan (MSP) Debt

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

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

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

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

Employment Insurance (EI) Debt

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

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

Social Assistance Overpayment Debts

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

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

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

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

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

Student Loans

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

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

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

Read More Tips for Repaying and Discharging Student Loans

ICBC Debt 

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

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

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

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

Temporary restrictions may be placed by ICBC, such as:

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

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

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

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

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

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

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

As Licensed Insolvency Trustees every year we help thousands of individuals and business owners get a plan to deal with their debts and achieve a financial fresh start. We’ve put together some information to help British Columbians better understand some of the considerations and general processes involved with getting debt help and evaluating potential debt management choices. Read on to learn about common indicators that bankruptcy may be your best debt option, and when a Consumer Proposal can be a better debt solution.

It is always best to discuss your specific situation with a qualified Licensed Insolvency Trustee or Insolvency Estate Manager directly – you can even connect with a Sands & Associates professional from the comfort of your home.

Assessing your Debts & Resources

There are several considerations Licensed Insolvency Trustees take into account when helping someone assess their financial situation and the options that might be most suitable to help them address their debts.

When you meet with a Licensed Insolvency Trustee or Insolvency Estate Manager, you could expect them to ask about the following:

• Why You’re Seeking Debt Help
  • Do you have a specific issue we can help you with or goals you want to meet? For example:
    • Consolidating your debt
    • Finding a solution with a lower monthly payment
    • Stopping a wage garnishment or collection action
    • Being able to establish a target date to be “debt-free”
• Assessing Your Financial Situation
  • Who do you owe money to, and around how much?
  • Do you have income, if so, approximately how much?
  • What is your household living situation? Do you have dependants etc.?
  • What are some of your regular household expenses?
  • Do you own any assets, if so, what are they?

Once we have a better idea as to your circumstances and any specific financial challenges you may be facing, we’ll discuss potential debt options together. Depending on your situation, you could have several viable choices to consider utilizing to get out of debt, including:

• Negotiating with your creditors informally
• Traditional debt consolidation
• Credit counselling programs
• Non-borrowing consolidation with a Consumer Proposal
• Personal bankruptcy

Use our Free Online Debt Options Calculator to Compare Payment Scenarios

 “Is it Better to File Bankruptcy?”

Since no two situations are alike, there is no single definite answer to “when is bankruptcy best” – but there are a few factors that could indicate a bankruptcy may make sense as a solution for debt relief and a financial fresh start:

Your income is very low or uncertain

Income is a key factor to consider in virtually all debt options, whether you are attempting to qualify for a consolidation loan, repaying debts in a credit counselling plan, or filing bankruptcy:

• Much of the overall bankruptcy process (such as how much you will need to pay as well as how long your bankruptcy lasts) is based on a person’s take-home income. If your income is low, this could mean a short bankruptcy term with minimal cost ($200 per month over the 9-month bankruptcy period), as is the case with most bankruptcies.
  • This is generally quicker and far less costly than repaying your debts in full.
• If your income fluctuates considerably, is not documented, or is considered low by lenders’ standards this can impact your ability to be granted financing through debt management solutions like consolidation loans.
  • In some situations, if you are self-employed it can also be more challenging to demonstrate to a bank that you have the steady income required to pay back a consolidation loan.
• Because credit counselling programs require you to repay your debts in full, there is no opportunity to consider your monthly income into the overall payment requirements – this can result in credit counselling settlements being unaffordable for many people with a lower income.

You have few assets (if any)

Lenders often use a borrower’s assets such as real estate or a vehicle as collateral or ‘security’ against consolidation loans – many financial institutions will not extend you a consolidation loan if you do not have enough assets to borrow against.

• Even if you do have an asset that is acceptable as security, use caution before pledging any assets – or taking on a co-signer for financing. You may be giving your creditor access to an assets that would otherwise be protected, or risking your co-signer’s money and credit history in the event you are unable to maintain your payments.
  • Unlike many people believe, co-signing a debt for another person means they are 100% responsible for the unpaid balance, not 50/50.

Although the assets that you have will be noted when assessing the option, most people keep all their assets when they file personal bankruptcy, due to provincial exemption allowance laws. These exemptions include provisions for assets including (but not limited to):

• Household goods, clothing, and medical aids
• A vehicle
• Home equity
• Tools of the trade
• RRSPs

You may also continue with vehicle financing in place if you choose to declare bankruptcy or make a Consumer Proposal to your creditors. Vehicle loans or leases, as well as mortgages are treated differently than other creditors such as credit card lenders.

Learn more about How Bankruptcy Protects Personal Assets

Your ability to repay a meaningful portion of your debt is unlikely

Although lenders may not specifically consider whether your household situation and living expenses leave enough money for you to comfortably repay your loan, this is a key factor that you should consider before agreeing to any financing.

• While repayment terms on debt consolidation loans are usually lower than what it would cost you to pay all the separate debts each month, this monthly payment amount is often still too high to make the loan payments manageable in already-stressed household budgets.
• In other cases, the total amount of debt owing may far outweigh a person’s income and ability to repay the debt. This often occurs in situations where the debt was unexpected (such as a large CRA balance or ICBC debts), or where a person’s circumstances changed drastically from when they took on the debt initially (job-loss, health issues, divorce or separation are common instances).

Because bankruptcy payments are based primarily on household income and not the overall amount of your total debt, your unique circumstances are taken into consideration. If your income is above a government-set threshold, you may repay a small portion of your debts in a bankruptcy, but this is generally far less than repaying the entire debt – with or without interest.

In situations where you can repay a portion of your debt, a Consumer Proposal may be an ideal solution that allows you to cut your debt, while avoiding filing bankruptcy.

“When is it Better to Make a Consumer Proposal?”

As with considering personal bankruptcy, no two situations are exactly alike – but in many cases where a person has some means of paying a manageable amount of their debt, Consumer Proposals can be a great option in a variety of circumstances – they are very flexible, tailored to each person’s circumstances.

A Consumer Proposal is not the same as bankruptcy, and provides an affordable alternative to other consolidation options including:

• Consolidations loans – which can be difficult to qualify for and have high monthly payments since you are repaying 100% of your debt, with ongoing interest.
• Credit counselling programs – which cannot deal with many types of debts and can also have higher monthly payments since you will repay 100% of your debt, with additional professional fees.

How Do Consumer Proposals Work?

Consumer Proposals are a unique type of legal debt consolidation that will allow you to combine virtually all types of debts into one (usually monthly) repayment plan, automatically stopping further interest. No borrowing is involved with a Consumer Proposal, and your creditors will be prohibited from contacting you for further payments or collection actions. Some points to know about Consumer Proposals:

• Consumer Proposals can consolidate a wide range of debts, from credit cards to CRA debt and more.
• Debts can often be cut substantially, making the total amount of debt that needs to be repaid as little as 20% of the total debt.
• Consumer Proposals are only available by working with a Licensed Insolvency Trustee.
• There is no additional cost or professional fees payable by the individual when making a Consumer Proposal.
• Consumer Proposal are almost always accepted by creditors, and only 50% of your creditors (by dollar value) need to agree to your plan in order for it to be legally binding on all of them.

A Licensed Insolvency Trustee can help you evaluate whether a Consumer Proposal could be your best solution to consolidate your debts and get a financial fresh start and will work with you to offer a suitable proposal to your creditors.

Browse Consumer Proposal FAQs Here

“Do I Qualify for Bankruptcy or a Consumer Proposal?”

To qualify for bankruptcy or making a Consumer Proposal in Canada you must be insolvent – this means that you need to:

• Owe at least $1,000, and
• Be unable to repay your debts as they become due, either because you are unable to make your payments as agreed, or because you owe more in debt than you own.

These “qualifiers” are very broad, which allows virtually anyone access to legal debt solutions should they find themselves needing help.

As outlined previously, there are many factors to consider in determining which debt management solution may be the best to deal with your debts – for example, just because a person is insolvent would not necessarily point to bankruptcy as the ideal option – and a Licensed Insolvency Trustee or Insolvency Estate Manager can help you assess your situation and guide you through the process.

There are also some areas of your finances that are not factors in whether a bankruptcy or Consumer Proposal may be ideal choices for you. Contrary to what many people may believe, considerations such as your credit history, credit score and account standings do not impact your eligibility to access debt help solutions like bankruptcy or Consumer Proposals.

There is no need to wait until you are facing a situation of extreme stress and financial crisis before connecting with a Licensed Insolvency Trustee.

Some people may have an ‘ideal’ credit history, while others may have low scores. In fact, as many as 70% of people who file for personal bankruptcy have excellent credit scores as they continue to make all of their minimum payments up until the point they declare bankruptcy.

• One major challenge in getting a consolidation loan to help manage debts is that many people find their credit score is too low to qualify for the loan.
  • If you have accounts that are overdue, missed payments, or even collection actions being taken against you, there is a good chance your credit history won’t meet typical lender requirements for a loan.
  • Others find that they are simply too over-extended credit-wise to be able to consolidate via a consolidation loan through a bank.

Although we’ve broken down several considerations, there are many variables to your unique situation – as Licensed Insolvency Trustees we would always encourage you to connect with a local representative directly before ruling out potential options and committing to any self-assessed debt solution. We are here to help you make informed decisions – debt help without judgment.

Get debt advice, understand the debt solutions available and get a financial fresh start – book your free confidential consultation with Sands & Associates now. Our debt help services are available across BC.

The post When is Filing for Personal Bankruptcy the Best Option? appeared first on Sands & Associates.

Working with a Licensed Insolvency Trustee

Declaring personal bankruptcy in Canada is done with the help of a Licensed Insolvency Trustee – you do not need to hire a lawyer or consultant. The entire process and cost of filing a personal bankruptcy including the Trustee’s fees and Government filing fees are set by the Bankruptcy and Insolvency Act – these tariff-based fees are strictly regulated and monitored by the Federal Government.

Free Debt Consultation

Before officially beginning a bankruptcy, you will need to connect with a Licensed Insolvency Trustee like Sands & Associates for a confidential debt consultation. No referral is needed – simply book your free debt consultation directly.

• A Licensed Insolvency Trustee or qualified Insolvency Estate Manager will meet with you confidentially and for free to discuss your specific situation, your goals, and to help you understand all of your legal debt options, in addition to and including bankruptcy.
• It should never cost you money to find out what solutions are available to you.
• This first debt consultation meeting is very important; some components of how bankruptcy, debt consolidation and Consumer Proposal processes work will vary depending on your unique circumstances. It is crucial that you get accurate information so you can make the best decision on how to move forward.

Bankruptcy may not be your only solution – many people are able to pay off an affordable portion of their consolidated debts and have the unmanageable balances and interest forgiven by making a Consumer Proposal instead. Click here to learn more about Consumer Proposals.

Cost of Bankruptcy Proceeding

There is a cost to declare bankruptcy and work through the process, however, unlike professionals such as accountants and lawyers, Licensed Insolvency Trustees do not set their own rates and fees; there is no “invoice for services rendered”. Many people mistakenly believe that the cost of bankruptcy is related to the amount of debt you have – this is false. Regardless of the total amount of debt that you are writing off in the bankruptcy, the tariff-based Trustee’s fees are the same.

Since most people keep all their assets in a bankruptcy, the bankruptcy costs are paid directly by the person who wants to declare bankruptcy:

• In most bankruptcies the direct cost to the person filing bankruptcy is $2,700. Usually the Licensed Insolvency Trustee will work out a payment plan where you will pay this over the course of the nine-month period of bankruptcy.

The costs covered in this personal bankruptcy fee include:

• The filing fee to register the bankruptcy in Canada ($86-172);
• Costs for two financial counselling sessions done as part of the bankruptcy;
• Preparation of and filing related income tax returns;
• Ongoing support throughout the bankruptcy process.

If you’ve filed bankruptcy before the fees payable will be higher, and the length of time before you will be eligible to be discharged (released) from bankruptcy will also be longer. Click here to learn more about filing for bankruptcy if you’ve been bankrupt before.

Bankruptcy Costs and Surplus Income

Your monthly after-tax income is the major factor that impacts both the amount of money you pay towards your bankruptcy, as well as how long it will take before you are released from bankruptcy.

• While most people filing personal bankruptcy will fall under the scenario of paying only the basic bankruptcy costs over the nine months of their bankruptcy, if your household income (net of standard deductions as well as certain additional expenses) is above the government-set ‘superintendent’s standards’, you may be required to pay what is called ‘surplus income’.
• It’s important to understand that if you have surplus income, you will not pay the $2,700 bankruptcy fee AND your surplus income – you will instead pay either $200 per month for 21 months (to a total of $4,200) or your surplus income amount for 21 months (whichever is the higher amount).
• The income standard used to calculate surplus income varies depending on the number of people in your household and is generally adjusted each year to account for increases in cost of living.
• Money paid as surplus income is done for the general benefit of your creditors, since this will usually mean they will receive some return on the debts that are being forgiven.

Example:

A single person has net (take-home) pay of $3,000 per month.

The monthly superintendent’s standard for a one-person household (for 2025) is $2,666.

$3,000 – $2,666 = $334
$390 x 50% = $167

Monthly bankruptcy payment (surplus income) is $167 total, for 21 months.

Some Key Points About Surplus Income

• There are many variables when it comes to surplus income and people commonly have expenses (i.e. childcare, medical costs) which can reduce how much surplus income they need to pay;
• Only 50% of surplus income (net income exceeding the superintendent guidelines) needs to be paid;
• If surplus income is payable, the bankruptcy period will be extended from nine months to 21 months (in a first-time bankruptcy).

A Licensed Insolvency Trustee will help you review your specific situation and estimate any surplus income obligations with you before you commit to bankruptcy. If surplus income is likely, you may wish to consider making a Consumer Proposal as an alternative to filing a personal bankruptcy.

Get the facts about bankruptcy, debt consolidation and Consumer Proposals from a caring debt expert – book your free debt consultation with a local Sands & Associates representative today. Your financial fresh start is waiting!

The post How Much Does it Cost to Declare Personal Bankruptcy? appeared first on Sands & Associates.

With this year’s tax season upon us, Senior Vice-President of Sands & Associates and Vancouver Licensed Insolvency Trustee Blair Mantin joined BT Vancouver to dispel some common tax debt myths for individuals. According to debt help expert Blair Mantin, these are 5 things every Canadian should know about tax debt.

Watch the clip here and read more below:

5 Tax Debt Myths Debunked

1. Myth: You Only Need to File if You Owe Money

There are very few circumstances where an individual isn’t required to file an income tax return – and in nearly every case it’s in your best interests to file, even if you don’t owe any extra money. Besides wanting to claim a refund (and fulfilling what Canada Revenue Agency (CRA) essentially views as your civic obligation), you’ll also need to file in order:

• For you or your spouse to receive credits such as GST, Canada Child Benefits, GIS.
• To create contribution room in an RRSP.
• To carry forward or transfer tuition amounts.

Having unfiled returns can also create challenges for you in situations where you need to prove your income, such as applying for credit or housing.

2. Myth: Incorporating Fully Protects Business Owners

Debts a sole proprietor or partnership accumulate are payable by their owners, since there is no distinction between business and owner. While corporations may protect owners from their debts to some degree, by being a director of a corporation there is still a personal liability created for certain debts you cannot avoid becoming personally responsible for, such as GST and payroll remittances, wages and debts you have personally guaranteed (i.e. committed to pay in the event the company cannot).

It’s extremely important for business owners to understand their responsibilities for tax compliance and what they need to file with CRA; CRA debt is one of the top reasons we see business owners needing debt help.

 Learn More About Debt Solutions for Business

3.  Myth: Tax Debt Can Expire

Although BC’s Limitation Act provides a two-year basic liability limitation period that prevents creditors from taking legal action against you for unpaid debts – debts owing to government bodies like CRA (or student loans) will not be subject to this limitation.

Consumers who don’t have any income may be able to avoid balances for some time, but for most people their unpaid tax debt will catch up with them eventually.

4. Myth: Only Employment Income is Seizable

Unlike with many other types of consumer debt, CRA has powerful collection methods and can begin a wage or bank account garnishment virtually overnight – and this isn’t restricted to employment income alone. In addition to wage garnishments placed with your employer, CRA may also resort to garnishing:

• Self-employment earnings (they may direct the notice to pay to your clients).
• Government income including CPP, OAS, EI benefits.

In addition to income, CRA can also place liens on your personal property.

Read an Overview of Wage Garnishment in BC

5.  Myth: You Can’t Have Tax Debt Forgiven

Licensed Insolvency Trustees are often contacted by individuals, business owners and even other financial professionals who are facing balances owing to CRA that they are unable to repay but think can’t be written-off for good. If you are looking for a solution to unmanageable and unpaid balances to CRA for income tax, GST, payroll or business debt the good news is that there are two options that can allow you to have these debts forgiven:

• A Consumer Proposal – consolidate and reduce virtually all your debts to an amount you can afford to repay, the unpaid portion is written-off by your creditors.
  • This is the only method to negotiate tax debts that CRA will accept.
• Bankruptcy – get full forgiveness for virtually all types of debts.

These are the only two methods of extinguishing government (and of course general consumer) debts in Canada and are available solely by working with a Licensed Insolvency Trustee.

Learn more about legislated debt solutions that can allow you a financial fresh start by connecting with a non-judgmental Sands & Associates representative in a local BC office – book your confidential free debt consultation now.

The post 5 Myths about Tax Debt appeared first on Sands & Associates.

If my spouse files bankruptcy will I be bankrupt too?

Simply put – NO! One person filing for personal bankruptcy does not automatically assign their spouse into a bankruptcy, full stop.

If both you and your spouse share the same joint debts or each have your own separate debts that you’re unable to repay, you may both decide to start a bankruptcy at the same time, but this is your decision – not a requirement in the law.

Sometimes one spouse may be in a position to repay a portion of their debt, but the other spouse is unable to afford any repayment – in this situation one spouse may decide to file a Consumer Proposal and the other a personal bankruptcy.

What is a Consumer Proposal?

A Consumer Proposal isn’t the same process as bankruptcy. A Consumer Proposal is a specialized debt consolidation tool you can access by working with a Licensed Insolvency Trustee. Essentially your consolidated debts are reduced down to what you can afford to repay (you may repay as little as 20-50% of your total debts with no interest), with the unpaid balance being forgiven (written-off) by your creditors. Learn more about Consumer Proposals here.

Will I be responsible for my spouse’s unpaid debts if they go bankrupt?

The act of marriage (or common-law marriage) on its own does not give your spouse’s creditors the right to demand payment from you for your spouse’s unpaid debts if they file bankruptcy.

You will not be responsible for repaying the creditors for the debts eligible to be discharged unless you have co-signed on the debts included in your spouse’s bankruptcy. In the event that there was a co-signer on the debts then the responsibility of repayment would then fall to that person. A spouse could also wind up liable for credit card debt if they used a supplementary card with their own name on it.

How will my credit be affected if my spouse files for bankruptcy?

If the debts included in and forgiven under your spouse’s bankruptcy belong solely to your spouse then your credit score and history is not affected by their bankruptcy proceeding.

How Long Does Bankruptcy Stay on a Credit History?

A bankruptcy will be reflected on credit history for 6 years, but it is possible to apply for and obtain new credit within as little as two or three years (sometimes even less). Many people who file bankruptcy go on to successfully get a new credit card, mortgage or vehicle financing within just a few years of bankruptcy discharge / completion.

Does the Licensed Insolvency Trustee seize my assets during my spouse’s bankruptcy?

As the spouse of a bankrupt individual, separate assets you own solely are not of interest to your spouse’s bankruptcy estate or Licensed Insolvency Trustee.

It’s important for both you and your spouse to know that filing a bankruptcy does not mean a person automatically loses assets. In BC there are a number of assets that can be claimed as exempt from seizure and are therefore “safe” from creditors – in fact, the majority of individuals filing for bankruptcy will retain all their assets.

Learn more about How Bankruptcy Protects Your Assets

Sometimes if a person believes that a bankruptcy filing is going to happen soon they may consider selling or transferring their assets to shield them from creditors – generally this is not advisable, and it’s often unnecessary due to the provincial asset exemption laws. If there have been assets transferred prior to filing for bankruptcy the Licensed Insolvency Trustee may be required to inquire and report on the specifics of the transaction.

What happens to my income when my spouse does a bankruptcy?

Income that you earn during the period of your spouse’s bankruptcy (which is normally either 9 months or 21 months in total) is your own and continues to be paid to you as usual.

Your spouse will be submitting a monthly budget form as part of their bankruptcy, detailing the household’s income and expenses. These budget forms are used to determine something called “surplus income” which dictates how much money your spouse needs to contribute towards their bankruptcy, and also how long the bankruptcy period will last. These amounts and timing will be discussed and estimated in detail before the bankruptcy process officially begins, so unless the household situation changes drastically a bankruptcy is normally a “no surprises” proceeding.

What is Surplus Income in Bankruptcy? Learn more

While the bankrupt person is required to report and verify the income and expenses of the household and may be required to pay surplus income, as their spouse you are not expected to pay any portion of your income, as it is not your bankruptcy. A non-bankrupt spouse can refuse to disclose their income should they choose to do so, although this will impact the bankrupt person by resulting in a reduced income standard being used to calculate their surplus income.

Despite sharing a household, in a bankruptcy a couple’s finances are quite separate. If you or your spouse are considering bankruptcy as a debt solution, it can be a good idea to bring your other half along during your first meeting. There can be quite a lot of information to be discussed and not only is it helpful to have a second set of ears, it also gives you both an opportunity to ask questions you may have and get your concerns addressed without delay.

Bankruptcy is a legal process most people are unfamiliar with and it can feel overwhelming not knowing where to start – the Licensed Insolvency Trustees and Estate Managers at Sands & Associates are here to help you.

Book your free confidential debt consultation to meet with a friendly and non-judgmental Sands & Associates representative in one of our local BC offices. Your debt-free future is waiting!

The post My Spouse is Filing for Bankruptcy – Now What? 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.