• Every day we provide debt advice and guidance to consumers with a range of needs, and a common thread is that “knowing is not owing” – people need to have the facts so they can make informed decisions about their unique situation.
• Even if you don’t consider your debt a problem, it’s important to understand your rights and responsibilities – owing money is stressful, there are many ins and outs when it comes to debt, and unfortunately what you don’t know can hurt you financially.

Read on as we break down 10 of the most common consumer debt myths and misconceptions. 

Myths About Debt You Owe

Myth: Creditors Can Always Sue You Over a Debt Owed

Fact: Canadian law sets out a statute of limitations on debt.

In BC, the Limitations Act caps the period of time a creditor has to take legal action against you (i.e. sue you) for a debt you owe. What this essentially means is that while the debt does remain payable, if it has been two years or more since you made a payment or acknowledged the debt in writing, then your creditor may not have further recourse to collect the debt from you, beyond putting notations on your credit history and sending you mail.

Myth: Co-signing Debt Makes You Responsible for Half

Fact: By co-signing a debt, you become equally responsible for repaying 100% of the unpaid balance to the lender.

When you co-sign a debt, if the original borrower doesn’t pay back the debt the lender can demand that anyone listed in the loan or agreement (i.e. the co-signer/co-borrower) repay the entire balance – not half. This type of liability is known as ‘joint and several’.

• Read your applications and lending agreements carefully to understand the terms of borrowing and who is responsible for what – these can change depending on the lender and whether they are considering an application/account for “additional cardholders” or “co-borrowers/co-applicants.” Always check the fine print!

Myth: Marrying Someone Makes You Responsible for Paying Their Debt

Fact: One spouse is not responsible for repaying the debts of the other spouse solely by virtue of marriage or cohabitation.

You are responsible for repaying debts you’ve co-signed for or taken on jointly (as discussed above), or debts triggered as marital debts by the act of separation under the Family Law Act. You cannot be suddenly made liable for a debt owed solely by your spouse just because you got married. Essentially, there is no way to “marry into” a debt.

Am I Responsible for my Spouse’s Debts? Learn More

Myth: You Should Always Buy Insurance Protection

Fact: Credit card balance protection insurance often isn’t “worth” its cost.

Some banks are quick to sell and aggressively promote various insurance products, and while some are worthwhile considerations, like life insurance for a young family, others provide little value in most circumstances – one of these Licensed Insolvency Trustees often caution against is ‘balance protection insurance’.

• Even if you don’t carry a balance each month you pay fees into this product, which can be as high as 1% of the purchases on the card. Over the course of one year, this could take a 20% credit card interest rate to more than 32%.
• The other issue is that in most instances where you’d expect the insurance to help, it does very little. For example, if you lose your job, it may cover the minimum payments for the period you are unemployed – but very little of these payments will reduce the balance you owe on the card.

Myth: Incorporating Your Business Fully Protects Owners Personally

Fact: While corporations may protect owners from their debts to some degree, there is still a personal liability created for certain debts that cannot be avoided.

This personal liability can include debts such as:

• Wages; GST and payroll remittances
• Debts you have signed a personal guarantee for

Many business owners are aware that essentially any debts a sole proprietor or partnership business accumulate are payable by their owners, since there is no distinction between business and owner, but unfortunately, some business owners have a false sense of security when it comes to protecting their personal assets and liabilities if they incorporate their business.

Myths About Managing Debt

Myth: There’s No Forgiveness or Renegotiation Option for Government Debts

Fact: You can have government debts reduced and cleared by filing a Consumer Proposal (or forgiven through bankruptcy).

A Consumer Proposal is a legal debt consolidation remedy that can be used to stop all interest, reduce amounts owing by up to 50-80%, and work out a payment plan for what you can afford to repay. Government debts like taxes, business GST, student loans, benefit overpayments and more – plus debts like credit cards, payday loans, lines of credit, etc. can all be dealt with using this powerful tool, which will also halt a wage seizure or bank account freeze.

Myth: Minimum Payments on Credit Cards are Enough

Fact: Making just minimum monthly payments may keep your account in good standing, but it’s not enough to get debt paid off without incurring considerable interest costs.

Many individuals fall into a trap of just making the minimum payments on their credit cards and assuming that they are making progress towards getting their debt paid off. The reality is that at 20% interest, making minimum monthly payments on a $10,000 debt could take more than 25 years to clear and will cost more than $12,000 in additional – and avoidable –  interest charges.

• Banks must disclose exactly how long it will take to pay off a debt if you make only the minimum payments, so you can see this breakdown on your own bill.
• If you can only afford minimum payments each month, you very likely have a debt problem and should talk with a Licensed Insolvency Trustee as soon as possible.

Compare Your Debt Options

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

Myth: Your Credit Score is a Reliable Indicator of ‘Financial Health’

Fact: A credit score is essentially a numeric rating used by lenders to determine whether they will loan money, and at what cost.

Part of the problem with taking a ‘good’ credit score as an indication of financial and debt health is that habits that drive a high rating are often at odds with habits that lead to financial success. Since a credit rating mostly measures whether you pay your bills on time it considers nothing about whether those bills are too high or if you have any savings or assets at all.

Myth: Debt Consolidation Must be Done by Borrowing

Fact: You can consolidate your debt without borrowing or interest by making a Consumer Proposal.

Many people considering how to manage their debts believe their options amount to consolidation loans, credit counselling programs, or bankruptcy – but these are not your only options!

• Consumer Proposals are an effective debt solution that allows you to consolidate your debts, repaying what you can afford, with the unpaid balance being forgiven by your creditors.
• This consolidation option requires no borrowing and interest charges (such as a consolidation loan), nor require you to pay added professional fees (such as credit counselling).

Myth: Canada has Government-Sponsored Debt Relief Programs

Fact: The Canadian government does not offer grants or programs for personal debt repayment other than the options provided by a Licensed Insolvency Trustee.

The Canadian government does not have government grants or debt programs available, but it does regulate legitimate legal debt relief options that are available through Canada’s designated debt help professionals – Licensed Insolvency Trustees – namely Consumer Proposals (to consolidate and cut debt) and bankruptcy (to get debt forgiveness), as well as some student loan relief administered through Canada Student Loans.

Get Information and Advice About Your Debt and Debt Options 

The best and safest way to get accurate information about debt, and your debt options and resources, is to reach out directly to a Licensed Insolvency Trustee local to your province and ask to have a free consultation – you don’t need a referral to talk confidentially with us.

• Sands & Associates is available for help seven days a week and we have options for in-person appointments, as well as full support over the phone and online videos.
• In about 30 minutes you should have a clear understanding of your situation and next steps in the debt solution you decide best fits your needs. Knowing is not owing! 

Get solutions, support, and a debt-free plan that’s right for you.

The post Debunking Common Consumer Debt Myths appeared first on Sands & Associates.

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

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

Key Ways a Consumer Proposal Will Affect You 

A Consumer Proposal Provides Protection from Creditors

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

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

A Consumer Proposal Restructures Your Debt Payments

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

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

Book Your Free Consultation

A Consumer Proposal Temporarily Affects Your Credit Rating

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

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

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

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

Key Ways a Consumer Proposal Will Not Affect You 

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

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

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

Book Your Free Consultation

A Consumer Proposal Doesn’t Affect Your Employment

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

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

A Consumer Proposal Doesn’t Take Away Your Tax Refunds

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

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

Book Your Free Consultation

A Consumer Proposal Doesn’t Prevent Immigration Sponsorship 

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

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

Is a Consumer Proposal a Good Solution for Me? 

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

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

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

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

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

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

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

Book Your Free Consultation

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

Watch the clip here, and read more below:

Potentially Risky Consumer Debts

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

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

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

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

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

Compare Monthly Payments with Our Debt Options Calculator

Most Risky Consumer Debts

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

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

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

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

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

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

Learn More About Solutions for Having Government Debts Forgiven

Consumer Debts to Be Cautious Of

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

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

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

Read More About Co-Signing Debts

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

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

Learn More About Options to Consolidate Your Debt

Where to Get Debt Help in BC

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

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

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

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

Strategies to Pay Off Debt

Debt payments can be a big demand on household income, and this is a key reason why paying off debt is a high-priority financial goal for many consumers. Everyone’s personal situation and needs are unique when it comes to ‘how best’ to deal with debt though, and it’s important to remember that the types of debt, balances, and personal circumstances you have will greatly impact the pros and cons of your options.

If you are looking for ways to pay off your debt, you might consider some of the following strategies.

Do-It-Yourself Debt Payment Plans: If you don’t have a lot of debt or other demands on your finances, you may be able to clear your debt with a self-directed plan and some careful budgeting.

• After listing all your debts, you may choose to prioritize paying off certain debts first based on factors such as debts with the highest interest rates, or debts with the lowest balances.
  • You might also benefit from contacting your creditors to try to negotiate lower interest rates on your debts.

Keep in mind that if it would take you longer than five years to pay off your debt, you may find yourself paying a lot in interest over time – and if you don’t have enough money in your budget to accumulate savings at the same time you’re paying off your debt, you’ll be especially vulnerable to unplanned costs setting you back.

Compare Your Debt Options

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

Refinancing Your Debt: You may be able to save some money on interest costs by combining eligible debt balances into a line of credit, consolidation loan or even a ‘balance transfer’ to a different credit card with a lower interest rate.

• This type of debt solution doesn’t come with any special benefit besides repaying your debt at a lower interest rate – you’ll still repay all your debts in full, with a bank collecting interest and other financing fees for lending you the money to pay off your other creditors.
  • You’ll likely need to leverage equity in a major asset or rely on a relationship with a family member or friend willing to co-sign for you to use this type of solution, both of which can be highly risky.

Debt Repayment with a Credit Counselling Program: If you have only a few basic consumer debts with low balances, a debt repayment plan offered by a credit counsellor may allow you to repay your debts in full without ongoing interest charges.

• Credit counselling plans don’t cut balances, they just (usually) freeze future interest charges.
• Always confirm whether you have any debts that would need to be paid separately to the credit counselling payments.
  • Any government creditors (such as Canada Revenue Agency for example) will not accept credit counselling program payments and will continue to charge interest and pursue you for payment.
• Make sure the amount you will save in interest costs is greater than the credit counsellor’s fees. Even non-profit credit counselling plans cost money!

Solutions to Pay Off Your Debt Faster

When it comes to ways to reduce, settle, cancel or forgive your debts, there are a few potential options to do this, though it is very important to understand that in Canada the only way to safely, legally cut your debt is by working with a Licensed Insolvency Trustee.

• Licensed Insolvency Trustees are Canada’s only federally-regulated debt help professionals, specifically trained, and certified to provide consumers debt advice and debt management services.

Making a Consumer Proposal

(Only available through working with a Licensed Insolvency Trustee)

If your total (non-mortgage) debts are under $250,000, a Consumer Proposal could be an ideal choice to consolidate and cut your debt.

Consumer Proposals are one of the most popular solutions offered by Licensed Insolvency Trustees and can provide you significant advantages in managing debt, including:

• Consolidated debts are frozen, and there are no added interest costs.
• Debts are often cut by up to 50-80%.
• Your credit history is not a qualifying factor.
• Your creditors will be bound by the accepted Consumer Proposal and cannot change their minds, nor pursue you for collections, wage garnishments, etc.
• You can pay off your Consumer Proposal early at any time without penalty.
• There are no added professional fees added in or on top of your debt payments.
• A Licensed Insolvency Trustee will work with you throughout the process, and handle communication with your creditors.
  • A Consumer Proposal can ONLY be filed by working with a Licensed Insolvency Trustee. Don’t be fooled by ads for services that sound similar but are offered by a credit counsellor, debt consultant, or debt settlement agency.

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

Negotiating Debt Settlement

(May be able to do on your own, or with a debt consultant)

If you have cash on hand, you may try to negotiate with your creditors, offering them a lump sum of money to settle your debt for less than the total balance you owe. Some people also try to work with a debt consultant for this type of debt reduction service.

• Extreme caution should be used with any debt settlement company. Not only will you be charged fees for these services (or even unnecessary services or referrals), but some also employ high-pressure sales tactics, make unrealistic promises, and encourage strategies that can aggravate your situation with your creditors.
  • For example: You might be told to stop making your debt payments so you can instead save up money to accumulate a lump sum settlement to be offered to your creditors. In the meantime, you have no protection from creditors, who might start collection or legal action against you due to their debts going unpaid.
• Review any contracts or agreements carefully before signing, and never send money before researching the company.

Filing for Bankruptcy

(Must be administered by a Licensed Insolvency Trustee)

If your situation is such that you have very minimal income, or other extenuating circumstances that make any sort of debt repayment a hardship, you may want to explore whether bankruptcy could be the best option to forgive your total debts.

Although many people are anxious about the idea of declaring bankruptcy, or fearful they will not be able to recover financially, the reality is that personal bankruptcy is a relatively straightforward and private legal process that offers debt relief and a financial fresh start.

• Filing bankruptcy will immediately trigger a freeze for your creditors and in as little as nine months you can be discharged (released) from bankruptcy with all your debts forgiven, allowing you to move forward with your life.

Is Personal Bankruptcy Right for Me?

Getting Debt Advice

Most people don’t know what resources they have available for support in managing their debt, and this often means people have a series of trials and errors before a debt repayment plan that gives them good results. Unfortunately, these false starts or unsuccessful attempts to manage debt can be not only discouraging, but also come at a cost to finances, time, and personal wellbeing.

If you’re dealing with anything debt-related, a Licensed Insolvency Trustee is the most appropriate resource to seek out and should be your first contact.

You don’t have to navigate the complexities of managing debt alone or pay money to get complete information and qualified advice from an expert. In an hour’s free consultation a Licensed Insolvency Trustee can help you fully understand your situation and all your options.

4.9

Based on 3285 reviews

Review Us

– 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 

read moreread less

– 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 

read moreread less

– 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 

read moreread less

– 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 

read moreread less

– 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 

read moreread less

– 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 

read moreread less

– 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 

read moreread less

– 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 

read moreread less

– 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 

read moreread less

– 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 

read moreread less

Should I Get Professional Debt Help?

If you feel like you might have a debt problem – you’re probably right! It’s best to connect with a Licensed Insolvency Trustee as early as possible, doing so can save you a lot of frustration (and money). Although we do help people facing urgent situations such as wage garnishments and legal action, we also offer professional advice, guidance – and debt-free plans – to people who feel stuck in a debt cycle, or may be facing debt warning signs such as these:

• Struggling to pay your debt off even though you make regular payments.
• Continually relying on your credit to meet costs of living and financial commitments.
• A debt repayment plan that’s going to take longer than five years.
• Feeling generally stressed, anxious or worried about your debt.

Every consumer should know that they have the right to connect directly with a local Licensed Insolvency Trustee in their province:

• You do not need a referral to speak with a Licensed Insolvency Trustee, and BC residents can book a free, confidential consultation with a local Sands & Associates Licensed Insolvency Trustee.
  • All our services are available in person, over the phone, or online.
• You are under no obligation to continue working together, and there is no impact to your credit history, and no hidden fees.

Get non-judgmental advice on dealing with debt – and solutions that work. Book your free confidential consultation with a caring local expert today.

The post What Can I Do to Pay Off my Debt? appeared first on Sands & Associates.

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

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

Common Causes of Debt Problems in Relationships

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

Misunderstandings About Legal Responsibility to Creditors

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

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

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

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

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

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

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

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

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

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

Understanding Debt Liability for Couples and Families – Learn More

Managing Debt and Household Money Matters in Your Relationship

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

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

Have Open and Ongoing Conversations

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

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

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

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

One Person Handles All the Finances

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

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

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

Don’t Try to Hide Money Troubles or Financial Issues

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

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

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

Consolidation & Consumer Proposal Calculator | Compare 4 Debt Options

Getting Debt Under Control

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

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

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

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

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

Access Professional Debt Help Services and Support in BC

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

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

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

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

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

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

What Does it Mean to Co-Sign Debt?

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

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

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

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

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

Learn more about Wage Garnishment in BC

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

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

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

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

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

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

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

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

Learn more about Debt Help Services in BC

Before You Co-Sign a Debt

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

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

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

Joint Credit Card Accounts

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

Co-Signed Loans

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

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

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

Learn more about Personal Debt Consolidation

Spousal Debts

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

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

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

Learn more about Debt Liability for Couples & Families

Personal Financial Help

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

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

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

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

Preparing for Your Consultation with Sands & Associates

Consolidation Without Borrowing or Requiring a Co-Signer

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

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

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

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

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

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

The post What You Should Know About Co-Signing Debts appeared first on Sands & Associates.

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

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

When is Your Spouse Responsible for Your Debt?

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

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

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

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

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

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

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

Family Money Problems

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

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

Co-Signed and Joint Debt

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

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

It’s important to note that:

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

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

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

Debts and Divorce

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

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

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

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

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

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

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

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

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

What Happens to Your Debt When You Die?

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

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

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

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

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

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

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

Getting Professional Debt Help

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

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

Risks of Self-Assessing Debt Solutions

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

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

Learn about Ways to Have Government Debts Forgiven

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

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

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

Impact to Your Spouse of Bankruptcy or Consumer Proposal

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

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

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

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

Solutions to Deal with Joint Debts

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

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

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

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

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

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

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