Canada’s Number One Alternative to Bankruptcy: A Consumer Proposal

In Canada consumers have two legal debt solutions available to them – personal bankruptcy, and a special type of debt consolidation called a Consumer Proposal.

A Consumer Proposal can offer many benefits in dealing with your debt and providing debt relief, allowing you to consolidate and cut your debt without having to file for bankruptcy. This unique option is only available with the help of a Licensed Insolvency Trustee.

How a Consumer Proposal Consolidates and Cuts Debt – Without Bankruptcy

A Consumer Proposal will combine your debts and you’ll work with a Licensed Insolvency Trustee who will prepare and coordinate your offer to repay your creditors the portion of your debt that you can afford over a period of up to five years, in full settlement of your debt.

• You may be able to cut your debt by up to 50-80%, and you can manage virtually all types of debt through a Consumer Proposal, from credit cards to Canada Revenue Agency debt, to student loans and more.
  • Consumer Proposals are the only way to reduce government debts, besides declaring bankruptcy.
• A Consumer Proposal is not a loan, and your credit history is not a qualifying factor.
• No interest will be charged to you on the debt you are repaying.

Your Licensed Insolvency Trustee will work with you as you decide how much you can afford to offer your creditors, taking your situation, needs and goals into consideration. When you’re ready, your Proposal will be sent to your creditors so they can consider your offer, and after your Proposal is accepted, your creditors will receive their payments through your Licensed Insolvency Trustee.

Making a Consumer Proposal – Step by Step

• If a simple majority (i.e. 50% or more) of your creditors (by dollar value) accept your Proposal, it is legally binding on all creditors, even those who didn’t respond or vote in favour of it.
• Filing a Consumer Proposal means your Licensed Insolvency Trustee steps between you and your creditors, so your creditors are no longer allowed to ask you for payments or try to collect money from you.
• Licensed Insolvency Trustee’s fees are set by government tariff and paid from the funds received by creditors. There is no additional cost to you the individual, besides what you offer your creditors in the Consumer Proposal.

Other Alternatives to Personal Bankruptcy

In addition to making a Consumer Proposal, you might consider one of these other options mentioned below to help you manage your debt without bankruptcy.

Whereas a Consumer Proposal only requires you to repay a portion of your debt to settle the balances in full, with no interest or added fees, other common types of debt consolidation do not reduce your balance, and you can expect to pay interest and/or added professional fees.

How Interest Rates Affect Your Debt and Payments

Pay Back Your Debt Through a Consolidation Loan

A lender may be willing to give you a consolidation loan to help you streamline your debt repayment. Typically, the new lender will pay off the individual creditors and you will then owe the new lender for this combined balance, plus interest charged by the new lender.

• The intended goal of a consolidation loan is normally for you to reduce the interest rate at which you repay your debt.
  • Often consolidation loans can reduce interest payments from 19-29% annually on a typical credit card down to approximately 10-15% annually on a consolidation loan.
• The new lender may require you to pledge an asset, such as a vehicle, as collateral for the consolidation loan, and/or require you to find a co-signer to further guarantee repayment of your loan.
  • It can be difficult to qualify for debt consolidation financing if:
    • You do not have an asset to pledge
    • You do not have a co-signer who will agree to be sign on with you
    • Your income is low, or inconsistent
    • Your credit rating isn’t high

Repay Your Debt Using a Credit Counselling Debt Management Plan

Private and non-profit credit counsellors may help you arrange a consolidated debt settlement with your eligible creditors, sometimes called a ‘debt management plan’. The credit counsellor will attempt to negotiate individually with each creditor to allow you to repay all your debt over a period of up to five years, sometimes without interest.

When considering credit counselling debt management plans, it’s important to be aware of the following:

• Not all creditors will work with credit counsellors, most notably Canadian and Provincial government organizations. If you owe Canada Revenue Agency for example, you will need to deal with this creditor and debt outside your credit counselling debt management plan (and any other who do not agree to your plan).
• There is no legal protection with this type of ‘informal’ debt management plan, so creditors can still pursue you for payments, and if you don’t make your payments on time the plan may be cancelled.
• All credit counsellors charge some type of fee for their services or programs, which you will pay on top of repaying your debts to your creditors.
  • You may find credit counselling difficult if:
    • You cannot afford to repay all your debts in full, plus the service fees
    • Some of your creditors will not agree to the plan and will continue to pursue you for payment
    • You have government debts

Questions to Ask Your Credit Counsellor About Their Services and Plans

Get Advice About Your Debt and Debt Options

If you’re considering your options to manage your debt, the best thing to do is talk with a Licensed Insolvency Trustee local to your area. In just 30 minutes we can help you understand your situation and all the options you have available to you.

Once you have clarity about all of the benefits of each debt resolution option you can confidently make an informed decision and move forward with the solution that best fits your needs.

Sands & Associates’ caring debt help experts are here for you, with support and solutions – and without judgment.

The post Alternatives to Personal Bankruptcy 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.

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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.

How Does Bankruptcy Work?

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

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

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

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

Preparing for Your First Meeting with Sands & Associates

What are the Advantages of Filing Bankruptcy?

The main benefits of declaring personal bankruptcy include:

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

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

What Happens to my Assets if I File Personal Bankruptcy?

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

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

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

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

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

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

What Do I Need to Do to Complete Bankruptcy?

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

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

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

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

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

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

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

My Spouse is Filing for Bankruptcy – Now What?

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

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

How Long Does Bankruptcy Take?

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

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

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

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

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

Can I Declare Bankruptcy More Than Once? Learn More

How Much Does Bankruptcy Cost?

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

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

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

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

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

When is Filing for Bankruptcy the Best Option?

How Long Does Bankruptcy Stay on My Credit?

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

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

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

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

There is life (and credit) after bankruptcy!

How Do I Claim Bankruptcy?

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

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

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

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

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

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

Every year thousands of people across BC work with a Licensed Insolvency Trustee to get formal debt forgiveness through filing Consumer Proposals or declaring personal bankruptcy. If you have concerns about managing your debt payments or your debts are becoming a challenge, here are some key facts you should know about personal bankruptcy in BC. As we often say at Sands & Associates, “Knowing is not owing!”

Bankruptcy Eligibility and Assistance in Canada

Most bankruptcies are considered voluntary, meaning the person filing seeks out relief and debt forgiveness through bankruptcy. Unfortunately many people face unnecessary delays getting debt help, prolonging their financial stress and difficulties because they are unsure as to whether they qualify for bankruptcy assistance. In reality bankruptcy is an accessible legal remedy should you find yourself in a position where you are unable to repay your debts.

The first step in getting debt relief through Consumer Proposal debt consolidation or personal bankruptcy is to connect with a Licensed Insolvency Trustee for a free confidential debt consultation.

1. $1,000 is the Minimum Amount of Debt Needed to Declare Bankruptcy

In Canada bankruptcy eligibility is very simple: You must owe $1,000 or more and be “insolvent”, meaning you are not able to repay all your debts.

• A $1,000 qualifier leaves a low barrier for consumers who need to access legal debt solutions, although it is uncommon for someone owing less than $5,000 to declare bankruptcy.
• Each person’s situation is unique, a $5,000 debt load can be just as unmanageable as a $75,000 one.

There is no need for you to be facing a stressful situation such as creditor harassment or even having a low credit score to file bankruptcy. Research has shown that most people who file bankruptcy have never actually missed a payment, and as many as 70% have a strong credit score.

2. You Don’t Need Permission from Your Creditors to File for Bankruptcy

Your creditors cannot stop you from seeking the protection and financial fresh start of personal bankruptcy. Not only do you not need to obtain permission from your creditors to start bankruptcy, but there is also no need to make a court application as part of the personal bankruptcy process.

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– Jayvee Lester De Castro

I highly recommend Sands and Associates especially Jennifer Thom. If you have problem with you debt. She will give you the best options and support throughout the process. – Jayvee Lester De Castro – 1 day ago 

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– Jarrod Barratt

I’ve been having financial hardship for quite some time now and I am pleased I reached out to Sands & Associates recently. They were very quick to get started on helping me with relief and I never once felt judged in the process. Omer and Jennifer were very polite and informative in the process and I thank you very much for your help and support. I would recommend Sands & Associates to anybody looking for some flexibility in their financial struggles. – Jarrod Barratt – 2 days ago 

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– All the good things

I found Jennifer Thom to be very helpful and friendly going over my options to get my debt dealt with. I felt welcomed without judgment and she made my stress and anxiety lessen which was huge for me. Thank you for your help and I look forward to a new future where I can be in control and not worried about how I’m going to survive debt. All the best. Will recommend. – All the good things – 2 days ago 

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– Saba N.

Sandra was amazing from start to finish with my consumer proposal. From answering questions and getting back to me in a timely manner when I knew she was very busy, the process was quick and painless. Paying this off will be great and then I can build up my credit again! Thanks again, Sandra ♥️ – Saba N. – 2 days ago 

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– Ali D

I went to Sands & Associates because I was overwhelmed with my debt and had no idea what to do. Camille helped me set up my consumer proposal, and honestly, she made the whole process so much easier than I expected.

She explained everything clearly — what a consumer proposal is, how it works, what my monthly payment would look like, and what debts would be included. She never made me feel embarrassed or judged, just supported.

Because of her, I finally feel like I have control over my finances again. She walked me through every step, answered all my questions, and made sure I fully understood what I was signing up for. I’m so relieved and grateful.

If you’re thinking about a consumer proposal or just don’t know where to start with your debt, talk to Camille. She’s patient, caring, and really knows what she’s doing. Highly recommend! 🙌 – Ali D – 2 days ago 

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– Shubham Batra

I had an exceptional experience with Sands & Associates during one of the most stressful periods of my life. I was overwhelmed, anxious, and unsure of where to turn, but the team treated me with genuine care and understanding from the very first moment.

Helen was absolutely amazing, patient, compassionate, and incredibly knowledgeable. She made everything easy to understand and helped me feel supported at every step. Hashan was also extremely helpful and kind, always quick to respond and guiding me with professionalism and empathy.

Thanks to both of them, I finally felt relief and clarity during a really difficult time. I’m truly grateful for their support and highly recommend Sands & Associates to anyone who needs trustworthy help and real compassion. – Shubham Batra – 2 days ago 

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– Emilee Stonehouse

I am very happy I got to work with Sand & Associates. It has been making life so much easy dealing with the debt I had. Plus working with Dana, and everyone there has been a delight to move things forward and easier. Thank you Sands & Associates! – Emilee Stonehouse – 3 days ago 

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– ga wa

Great and quick communication
Selina helped me with my case.
Was so stressed, quick responses from her helped me calm down.
Thank you so much Selina
You are awesome – ga wa – 4 days ago 

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– Jenna Sullivan

Working with Carolyn was an absolute relief. From our very first conversation, she made what could have been a stressful situation feel manageable and even hopeful. She explained everything clearly, answered all my questions with patience and understanding, and made sure I felt supported every step of the way. Her professionalism and compassion made a huge difference, and I’m incredibly grateful for her help. I would highly recommend Carolyn and Sands & Associates to anyone who needs guidance and wants to feel truly cared for through the process. – Jenna Sullivan – 4 days ago 

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– Deep Brar

I can’t thank Sands & Associates enough, especially Jagdip Dial, for helping me through one of the most stressful times in my life. I was buried under debt and didn’t know where to turn, but Jagdip treated me with genuine kindness and respect from day one.

He walked me through every detail of the consumer proposal process, explained everything clearly, and never once made me feel judged. Because of his patience and guidance, I finally feel like I can breathe again and start rebuilding my life with confidence.

If you’re struggling with debt and feeling hopeless, please reach out to Jagdip and the team — they truly care, and they’ll help you find a way forward. – Deep Brar – 4 days ago 

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3. A Licensed Insolvency Trustee is Needed to Administer Your Personal Bankruptcy

In Canada, Licensed Insolvency Trustees are the only professionals designated and authorized to help you through the administration of a bankruptcy. You do not need to hire a lawyer, nor can you ‘represent yourself’. The first step in declaring bankruptcy is to find a Licensed Insolvency Trustee in your province.

• Once you’ve connected with a Trustee and decided to move forward with bankruptcy you will work with them throughout the entire process; they’ll be there to help guide you.
  • You might also work with an Insolvency Estate Manager – this is a debt help professional who is accredited to provide key debt management services alongside your Trustee.
• During the process you’ll also connect with a Qualified Insolvency Counsellor – these professionals are special financial/credit counsellors accredited by the Canadian Association of Insolvency and Restructuring Professionals.

What is a Licensed Insolvency Trustee? Learn More

Debt Forgiveness and Asset Protection – Advantages of Filing Bankruptcy

4. Bankruptcy Can Forgive Many Types of Debt

When you file bankruptcy you are choosing a powerful debt solution that can eliminate virtually all your debts. Most debts are dischargeable (forgiven) through a bankruptcy, although there are some exceptions which include: court-imposed fines, alimony and maintenance payments, money owing for things stolen and property obtained through false pretenses.

Many debts people assume bankruptcy doesn’t cover can in fact be forgiven, such as:

• General consumer and business debts (credit cards, lines of credit, overdrafts, payday loans, etc.)
• Secured debts – should you choose to end the commitment (vehicle shortfall, mortgage foreclosure)
• Debt for a business for which you have signed a personal guarantee
• Debt owing to another person
• Tax debts with Canada Revenue Agency (income taxes, GST, business taxes, etc.)
• Student loans (federal, provincial and private)
• Outstanding MSP premiums
• ICBC debts
• Debt due to gambling

Write-Off Debt Without Declaring Bankruptcy – Learn About Consumer Proposals

5. Bankruptcy Will Automatically Stop Creditor Contact

Although you don’t need to be behind on your debt payments to access bankruptcy services, if you are experiencing collection actions such as harassing phone calls or even wage garnishment, filing bankruptcy will halt this (or in fact prevent it before it starts).

Declaring personal bankruptcy creates what is called a ‘stay of proceedings’ which means that, by law, your creditors will be barred from contacting you for payment and all collection actions against you must cease once official bankruptcy documents are filed.

6. You Can Keep Assets if You Declare Bankruptcy

There is no bankruptcy rule that requires you to give up all your assets – in fact most people keep all their assets when they declare personal bankruptcy. BC’s Court Order Enforcement Act designates many assets as “exempt” with personal allowances for items including (but not limited to):

• Clothing and medical aids
• Household items
• Work tools
• A vehicle (or vehicle equity)
• Home equity
• RRSPs
• Life insurance policies
• Pension plans

Even if you own something that is not covered under the provincial exemption allowances, this does not necessarily mean that you would be required to surrender it. People often “buy back” the value of the item to their bankruptcy estate, retaining possession of it.

Learn More About Bankruptcy Protection for Assets and Income

Time to Complete Bankruptcy and Impact to Credit History

7. It Usually Takes Less Than a Year to Complete Personal Bankruptcy

When you start bankruptcy you get immediate relief from needing to make further payments on your debt, and once you are released (discharged) from bankruptcy your creditors will officially forgive and write-off those debts.

Many people mistakenly believe this “start to exit” process takes 7 years – but in most bankruptcy cases, you will be granted an automatic discharge/exit from bankruptcy only 9 months after the date your bankruptcy starts, provided that your few required duties have been successfully completed. 

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8. Filing Bankruptcy Has a Temporary Impact to Your Credit History

Just as you are not permanently in bankruptcy, neither will your credit history permanently carry a bankruptcy notation. Your bankruptcy will be reflected on your credit report for only 6 years from the date you exit (are discharged) and during this time you can still apply for and receive new credit.

• The vast majority who claim bankruptcy move on to get new mortgages, credit cards, vehicle loans, lines of credit etc., if they so choose.
  • Many people even build up their credit score faster by starting fresh following a bankruptcy than if they had continued in their previous situation.
• Credit history and scores can change dramatically in just a short period, and part of the bankruptcy process will involve one-on-one financial counselling sessions to help provide you with the tools and resources to move forward with success.

Learn More About Life After Bankruptcy

Privacy and Cost of Filing for Bankruptcy in BC

9. Personal Bankruptcy is Generally Very Private

Bankruptcy in Canada is quite a private process. Usually only your creditors, your Licensed Insolvency Trustee and the Office of the Superintendent of Bankruptcy (“OSB”) will be aware of your bankruptcy.

• Credit bureaus update their records from many sources, including records from the OSB. Much like your credit report, bankruptcy is considered a public record, but in reality the public is highly unlikely to search these databases given that there is a cost and specificity required to do so.

Many people worry their employer will find out about their bankruptcy, but normally the only time your Trustee would connect with an employer would be to direct a payroll manager to stop a wage garnishment previously in place.

If you are feeling the strain or stress of debt, know that you are not alone. Meet some of the people whose lives have been changed working with Sands & Associates.

10. Bankruptcy Has Minimal Cost, with Low “All-Inclusive” Fees

Not only are most bankruptcies quick to complete, but they also have a minimal cost, especially compared to repaying debt with interest. The bankruptcy cost is usually paid by the person declaring bankruptcy – these costs are set and calculated by government tariff (not an hourly fee for service).

In most bankruptcies the direct cost to the person filing is $2,700. At Sands & Associates we often extend an arrangement where you would pay this over the course of your 9-month bankruptcy ($300/month). This would cover everything including:

• The filing fee to register the bankruptcy in Canada
• 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 have debt you’re struggling to pay off, are facing a stressful situation with creditors, or just want to get a plan to get out of debt faster, connect with a Licensed Insolvency Trustee today. At Sands & Associates consultations to discuss your situation, explore potential solutions (including bankruptcy and bankruptcy alternatives) are always free, confidential, and without judgment. No referral is required – and you are under no obligation to commit to any process.

We’ll take the time to understand your situation and help you consider all your options – we aim for you to have a transparent and ‘no surprises’ experience so you can feel confident and make an informed decision about how you choose to move forward.

Learn about bankruptcy, debt consolidation and more – book your confidential free debt consultation with Sands & Associates today.

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]]> https://www.sands-trustee.com/blog/10-facts-you-should-know-about-personal-bankruptcy/feed/ 0 https://www.sands-trustee.com/blog/how-bankruptcy-protects-your-assets/ https://www.sands-trustee.com/blog/how-bankruptcy-protects-your-assets/#respond Wed, 11 Sep 2019 15:45:06 +0000 https://www.sands-trustee.com/?p=7985 Many people facing a serious debt problem avoid considering bankruptcy as a solution because they believe filing bankruptcy will cause them to lose their personal assets or put their income at risk. Contrary to popular belief, the truth is that filing a bankruptcy in Canada actually provides protection for your assets and income. Read on […]

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]]> Many people facing a serious debt problem avoid considering bankruptcy as a solution because they believe filing bankruptcy will cause them to lose their personal assets or put their income at risk.

Contrary to popular belief, the truth is that filing a bankruptcy in Canada actually provides protection for your assets and income. Read on to learn more about how bankruptcy protects your assets. 

What is a Stay of Proceedings in Bankruptcy?

Canada’s Bankruptcy and Insolvency Act states that when a person formally files for insolvency (the beginning of the official bankruptcy or Consumer Proposal process), no creditor has any remedy against the person or their property. This means that creditors cannot start or continue any actions to recover the debt balance they are owed, and the stay of proceedings in a bankruptcy or Consumer Proposal is a powerful measure to provide protection from creditors, even government creditors like Canada Revenue Agency.

• Your bankruptcy filing triggers the stay of proceedings, and this legally prevents your creditors from continuing to ask you for payment, from continuing collections or court action, and from seizing your assets, including your bank account or wages.
• In situations where creditors may have been about to begin, or have already begun serious debt collection methods, filing bankruptcy can protect assets that may otherwise be at risk from creditors.

Without being shielded by bankruptcy laws, when a person is unable to pay their debts, they are often quickly subject to collection actions from their creditors, which can lead to creditors attempting to seize assets and even garnish wages. For people who have been harassed with phone calls, texts or letters asking for payments or past due debts by creditors or collection agents, their bankruptcy’s stay of proceedings is always a welcome relief.

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Do I Lose All my Assets by Filing a Bankruptcy?

Contrary to what you may have heard and what many people mistakenly believe, most people who file bankruptcy actually keep all their assets. Here’s why:

When you enter into bankruptcy, provincial laws automatically give you entitlement to keep certain assets – these are often referred to as ‘exempt assets’, meaning that they are protected in the event of a bankruptcy.

In British Columbia, the law that gives individuals these exempt (protected) asset allowances is called the “Court Order Enforcement Act”. Each province has its own exemption allowances; in BC the bankruptcy protected assets are:

• Household Goods and Effects
  • Up to a $4,000 value, based on garage sale value (not replacement value)
• A Vehicle, or Equity in a Vehicle
  • Up to a $5,000 value; or
  • Up to a $2,000 value if you are behind on child or spousal support payments
• Home Equity
  • Up to a $12,000 value in Greater Vancouver and Victoria; or
  • Up to a $9,000 value elsewhere in BC
• RRSPs
  • Up to an unlimited value
    • Except for contributions made in 12-month period prior to filing bankruptcy. Note, transfers between RRSP funds are not the same as contributions.
• Clothing and Medical Aids
  • Up to an unlimited value
• Work Tools (Tools of the Trade)
  • Up to a $10,000 value

Calculating what is and isn’t considered an exempt asset should be done with the help of a qualified Insolvency Estate Manager or Licensed Insolvency Trustee – other factors such as whether or not the asset is subject to a mortgage, lease or loan, or owned jointly with another party may also impact equity figures. In addition to the exemption allowances listed above, many life insurance policies and virtually all pension plans are also considered to be exempt assets.

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It’s important to know that even if you have assets that are worth more than these allowances, you do not necessarily have to give the asset up in bankruptcy. There are a few potential avenues that would allow you to keep the assets. Here are two examples:

Repurchase of Asset in Bankruptcy

The non-exempt value of your asset may be paid into your bankruptcy estate, allowing you to retain possession of the asset.

$7,000 – Appraised Value of Vehicle Owned Free and Clear

-5,000 – Exemption Allowance for Motor Vehicle

$2,000 – Balance Paid Over 9 Months

File a Consumer Proposal

Filing a Consumer Proposal is the number one alternative to personal bankruptcy in Canada. In a Consumer Proposal your assets are not impacted, which can make it an attractive option for someone who may otherwise have a significant amount of non-exempt equity in an asset.

• Consumer Proposals work by consolidating your debts into one settlement and offering your creditors a partial repayment of the debt – the amount you can afford to repay.
  • Your debts may be cut down to as little as 20-50% of the balance with no interest charges and no requirement to surrender assets.
• A Consumer Proposal is not the same as bankruptcy, although it does offer an individual the benefit of the stay of proceedings when it comes to shielding you from creditors.

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How Does Bankruptcy Provide Income Protection from Creditors?

Because a bankruptcy filing will act as a barrier between you and your creditors, your income remains protected from wage garnishments and bank account seizures. Even if a creditor has already begun garnishing your income or has frozen your bank account, filing a bankruptcy will remove the ongoing garnishment or freeze.

This applies to virtually all creditors, including Canada Revenue Agency. In general Family Maintenance Enforcement Program collecting on child or spousal support payments is one of the few creditors who can continue a wage garnishment despite a bankruptcy filing.

Throughout the period of your bankruptcy income you earn would continue to go directly to you via your employer, pension provider etc.

Can I File Bankruptcy if I Have No Assets or Income?

It is not necessary to have any assets in order to make use of bankruptcy laws. Sands & Associates assists many people considering claiming bankruptcy who have very few assets, or no assets at all.

If you are facing a situation where you have neither income nor assets, you may wish to consider whether your creditors have any recourse to collect on the debts you owe – in some rare circumstances debts may essentially become uncollectable due to BC’s Statute of Limitations on Debt.

Get a plan for a financial fresh start today – book your free debt consultation with a local debt expert from Sands & Associates!

GET A FINANCIAL FRESH START

Book your free consultation with one of our experts and start living a debt-free life.

BOOK YOUR FREE CONSULTATION

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]]> https://www.sands-trustee.com/blog/how-bankruptcy-protects-your-assets/feed/ 0 https://www.sands-trustee.com/blog/can-you-keep-your-house-if-you-file-bankruptcy/ https://www.sands-trustee.com/blog/can-you-keep-your-house-if-you-file-bankruptcy/#respond Mon, 10 Sep 2018 15:45:19 +0000 https://www.sands-trustee.com/?p=7857 Many homeowners struggling with their debts worry what will happen to their house if they claim bankruptcy. The good news is that filing a bankruptcy does not mean that you will automatically lose your home. Let’s review some of the key facts about bankruptcy and home ownership. Home Equity is an Exempt Asset Every province […]

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]]> Many homeowners struggling with their debts worry what will happen to their house if they claim bankruptcy. The good news is that filing a bankruptcy does not mean that you will automatically lose your home. Let’s review some of the key facts about bankruptcy and home ownership.

Home Equity is an Exempt Asset

Every province in Canada gives people a set of exemption allowances. What this means is that there are laws that protect certain assets (including household furniture, RRSPs and more) in the event you file bankruptcy.

The idea behind exemptions is that each individual is entitled to retain a certain base level of assets in all circumstances, regardless of financial hardship and/or a bankruptcy filing.

If your home is in the Greater Vancouver or Victoria area each person is automatically allowed to keep home equity up to a value of $12,000 (and up to a value of $9,000 elsewhere in the province).

If You Declare Bankruptcy What Happens to Your Home Equity Over the Exemption Allowance?

If the equity in your home is more than the provincial exemption allowance this doesn’t mean you’ll automatically lose your home if you declare bankruptcy.

When the homeowner wants to keep their home, the equity value over and above the protected amount could be dealt with in a few ways, such as:

• Buying-out the equity as part of the bankruptcy (this is sometimes referred to as “repurchasing” home equity, although the homeowner doesn’t actually move out/lose the home);
• Filing a Consumer Proposal instead of a bankruptcy.

If a homeowner doesn’t want to keep their home, they may decide to sell the property through the bankruptcy – the homeowner would still be entitled to receive their exempt equity amount (up to $12,000) from the sale proceeds.

Will my Mortgage be Impacted by Declaring Bankruptcy?

If your mortgage payments are up-to-date and you want to continue with the mortgage in place, your mortgage will not typically be impacted by declaring bankruptcy. In most bankruptcies there are two “types” of debts – unsecured debts (like a credit card or payday loan) and secured debts (like a vehicle loan or mortgage). Whether a debt is unsecured or secured can change how it is dealt with under a bankruptcy:

Unsecured Debts: These types of debts do not hold any assets as collateral, so the creditor does not have any additional ‘power’. Unsecured debts are written-off through a bankruptcy. 

Secured Debts: Creditors (like a mortgage lender) who have a secured debt (like a mortgage) hold an asset as collateral, meaning they have a registered lien or charge on property. In this situation, you have a few choices. You could choose to carry on with the credit arrangements in place (ie. your mortgage); try to negotiate new terms; or choose to walk away from the asset altogether and let the secured creditor have the asset. 

Can I Make a Consumer Proposal if I Have a Mortgage?

Even if you have a mortgage you can be eligible to make a Consumer Proposal. A Consumer Proposal can be used to consolidate debt, cut debt balances and keep assets intact, while avoiding bankruptcy. If you can make some payment towards your debt each month, you may be able to make a legal debt settlement with your creditors using a Consumer Proposal filed by a Licensed Insolvency Trustee.

A Consumer Proposal allows people to retain assets (such as a home), and in addition to consolidating all your debts:

• Interest automatically stops;
• Debts can often be reduced by up to 30-80% of the balance due;
• Consolidate government debt and consumer debt.

Consumer Proposals normally do not include (or affect) an existing mortgage.

Can I Renew my Mortgage During Bankruptcy?

If your current mortgage is in good standing, generally lenders will honour mortgage renewals that come due during the period of your bankruptcy.

What About Foreclosures?

Sometimes the start of a bankruptcy is a good time to evaluate whether you want to continue with an existing mortgage that is falling behind. If you decide that you don’t want to keep the home and decide to let the bank move forward with foreclosure proceedings, any shortfall from the subsequent seizure and sale of your home would be written-off as part of the bankruptcy.

Learn more about how these and other legal debt options work when you have a mortgage. Book your confidential free debt consultation with Sands & Associates today!

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