Read on to learn more about how Division 1 Proposals can help to save a business. 

What is a Division 1 Proposal?

Debt settlement proposals for businesses are officially called Division 1 Proposals, which are an effective and flexible tool that can be used to eliminate business debt and save your business. 

A Division 1 Proposal can only be filed through a Licensed Insolvency Trustee and is a binding agreement with the company’s creditors to restructure their debts owing, usually by reducing amounts and/or adjusting interest charges and timing of required payments. 

• A key theme of a Division 1 Proposal is that it must offer creditors more than what they would receive if the business were to file a bankruptcy. The percentage of debt forgiveness and amount of debt repayment required under a Proposal often depends directly on the company’s cashflow.

How Does a Division 1 Business Proposal Work for Businesses?

The Licensed Insolvency Trustee works with the owners of the company to draft a Proposal that presents a “win-win” situation for both the business and its creditors. Typically, the creditors are asked to give up rights to the monies they are owed, in exchange for an offer by the company to pay a percentage of the total debt (i.e. so many cents on the dollar) over time or sometimes as a lump sum payment.

• In a successful Proposal, the company wins because it survives, free from the burden of its debts.
• The creditors win because they retain a customer and get some of their money repaid, whereas in a bankruptcy they are likely to receive very little.

If you are a business owner having difficulty paying yourself a salary from your business or are falling behind in debt payments or tax obligations such as GST, employee source deductions, or income tax remittances, a Division 1 Proposal could be an option for your business.

How is a Division 1 Business Proposal Structured?

Division 1 Business Proposals are normally structured as a payment plan over a set period of time, or sometimes as a one-time lump sum payment, however, Proposals can be flexible and as creative as needed – no one size fits all! Since one of the few requirements is that the business’ Proposal must offer more to creditors than a bankruptcy, this allows for a wide range of Proposal terms to be considered.

As a Proposal is a transparent, legally-supervised process, there may be other circumstances where a Proposal can make sense, beyond solely helping a business continue as a going concern. For example:

• A Proposal could be used to wind down a company with the business owner in control, or to conclude non-profitable arms of a business.
• A Proposal could also be used to sell non-performing assets in an asset-rich, cash-flow poor scenario.

Before eroding your personal assets or net worth to finance your company obligations, talk with a local Licensed Insolvency Trustee confidentially at no cost to discuss your situation and business debt solutions.

What Does a Licensed Insolvency Trustee Know about Saving a Business?

Many Licensed Insolvency Trustees are also designated accountants (CA/CGA/CMA), Management Consultants (CMC), and Chartered Insolvency and Restructuring Professionals (CIRP) with years of professional experience assisting businesses in financial difficulty.

Does it Cost Money to Talk to a Licensed Insolvency Trustee? 

A Licensed Insolvency Trustee can offer a fresh perspective, experience, and a full toolbox of options to solve your business’ debt challenges. Confidential initial consultations are offered at no cost or obligation.

What Would be Discussed in the Initial Meeting? 

The first goal when speaking with a Licensed Insolvency Trustee is often to determine if the business is worth saving. 

• In assessing the viability of a business, together we’ll review the operations of the company, its financial statements and its ability to generate cash flow.
  • The amount of cash-flow a company can generate, and the value of its assets is a key factor in determining the options business owners have.
• In order to provide you as much assistance as possible, we suggest that you prepare a list of your business creditors and most recent company financial statements for your initial consultation.

When Should a Business File a Division 1 Proposal?

Generally, a company might consider filing a Proposal when it becomes difficult to pay its trade accounts, payroll or other bills. The sooner the business’ financial standing can be professionally assessed, the greater its chances of survival.

Some common business owner reactions to a shortage of business funds are to:

• Apply for more credit.
• Inject personal equity (cash or assets) to fund or support the business.
• Make the mistake of delaying payment to Canada Revenue Agency (“CRA”) for GST or employee source deductions.

Rather than solving the debt problem on a long-term basis, all three of these actions tend to increase the business owner’s personal liability associated with the company.  

Learn More About Business Debt Mistakes to Avoid

What Creditors Should Every Business Owner be Aware of?

Business owners should be aware of all the company’s creditors, including those that give rise to director liability and/or personal liability. Common examples are:

• GST/source deduction debts to Canada Revenue Agency.
• Personal guarantees, whether to a bank, credit card, landlord, or trade creditor.
• Wages owed to employees.

When Would a Business Not be Worth Saving? 

Usually, a business is not worth saving through restructuring if the company is suffering continual losses and there are no apparent solutions to return it to profitability. In this situation, a voluntary business bankruptcy may be an option to write-off the business debts. 

Key Steps in a Division 1 Business Proposal

1. Notice of Intention to Make a Proposal

If a company fears that a creditor is going to take some action to shut the company down, such as obtaining a judgment or seizing assets, the company can file a Notice of Intention to Make a Proposal with the assistance of a Licensed Insolvency Trustee.

• The Notice of Intention to Make a Proposal is a legal document and upon its filing a “Stay of Proceedings” is started.
  • A Stay of Proceedings is essentially a “timeout” and protects the company by preventing creditors from taking any further collection action against your company.

2. File a Proposal

The company works with a Licensed Insolvency Trustee to formulate a Proposal. Once the Proposal is finalized it will be sent to your creditors by the Licensed Insolvency Trustee so they can consider the offer and vote in favour of or against the Proposal.

3. Meeting of Creditors to Consider the Proposal

Creditors vote on the Proposal by mail or in person at a meeting of creditors, which is held approximately three weeks after the initial Proposal is officially filed.

• The Licensed Insolvency Trustee must file a report to the creditors about the affairs of the company and causes of the company’s financial difficulties.
• The Licensed Insolvency Trustee must also present to the creditors his or her estimate comparing how much money the creditors would receive under both the Proposal and a bankruptcy. (Remember, the Proposal must provide creditors with more money than a bankruptcy.)

If the Proposal is accepted by the creditors and subsequently approved by the Court then all unsecured and secured creditors to whom the Proposal was made are legally bound by the terms of the Proposal – this includes any creditors who did not vote in favour of accepting the Proposal.

• For a Division 1 Proposal to succeed, a majority in number of creditors, and two-thirds in value of debt, must vote to accept the Proposal.
• In the event that the Proposal does not receive the required votes to pass the Proposal then the company is entered into bankruptcy, effective the date of the creditors’ meeting.

4. Complete Proposal

Once accepted, all creditors and the business must adhere to and complete the terms of the Proposal. The business has now achieved a ‘second chance’ at success. 

Still not sure if a Division 1 Proposal is the right solution for your business? Talk to a Licensed Insolvency Trustee today to explore your options.

The post Division 1 Proposals for Business Debt appeared first on Sands & Associates.

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.

• 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.

How Does Consumer Proposal Debt Consolidation Work? 

A Consumer Proposal is a legal debt solution that allows an individual to consolidate virtually all their debts into one repayment plan and cut the amount of debt that needs to be repaid to have all accounts settled in full. A Consumer Proposal is customized to meet the person’s specific situation and needs, and it’s not uncommon for total debts to be cut by as much as 50-80% or more.

Working with a Licensed Insolvency Trustee together you will determine the portion of your debt that you can afford to repay over a period of up to 60 months. Your debts will legally be frozen, and no interest will be charged as you make your Consumer Proposal payments, which are usually monthly. Once you’ve completed the terms of your offer the unpaid debt will be considered forgiven and can never again be legally attached to you.

• If your total debt is between $1,000 and $250,000 (not including your mortgage) and you are unable to immediately repay all your debts, a Consumer Proposal is one of the best ways to consolidate (and cut) your debt, getting you to debt-free in five years or less.

What are the Key “Pros” to Choosing a Consumer Proposal? 

Some of the pros to consolidating and cutting your debt with a Consumer Proposal can include:

• Your Proposal will be legally binding on all your creditors if the majority (by dollar value) agree to your offer. You can consolidate virtually all your debt, from credit cards to payday loans, lines of credit to overdrafts, government debts like student loans, outstanding taxes and GST and more.
  • You have the option to continue with ‘secured’ arrangements for financing such as your mortgage and/or car payments outside of your Consumer Proposal.
• No new interest is charged on your debt, your balances are frozen.
• Make a single, affordable monthly payment, which can make managing day-to-day finances much easier.
• Even if your financial situation improves, your payment terms will remain the same, although you may want to pay more on your Proposal to pay it off sooner.
• Your assets and income will be legally protected, and you’ll continue to receive income tax refunds and other tax credits as you normally would.
• Creditors will be prohibited from contacting you for payments and must halt all other collection actions, lawsuits and harassment. Even wage garnishments from Canada Revenue Agency must cease immediately after a Consumer Proposal is filed.
• You will have a clear debt-free date within the next five years, and you can pay off your Consumer Proposal early at any time, without penalty.

Lastly, some people may simply choose a Consumer Proposal because they can’t afford their debt payments anymore and they want to avoid filing for bankruptcy. In addition to the Consumer Proposal pros above, a Consumer Proposal can be more appealing than bankruptcy because there are no monthly budgets to submit, you’ll keep all your tax refunds, and there is less impact to your credit history.

Consumer Proposals VS Bankruptcy in Canada – Learn More

Are there Disadvantages or “Cons” to Making a Consumer Proposal? 

A Consumer Proposal can be a great fit for a lot of situations – especially compared to other options like consolidation loans, credit counselling plans, or trying to continue paying your debt in full with interest when you’re struggling to manage payments or growing balances. However, a Consumer Proposal may not be suitable for everyone, and some people may consider the following as disadvantages:

Your Consumer Proposal Will Take Time to Pay Off

You will get the immediate benefits of your Consumer Proposal as soon as it is filed, but of course it still takes time (up to five years) to make all your payments – and if your monthly payment is low you may need to take the full five years to get your Proposal payments finished.

While this timeframe is reasonable in comparison to other options such as consolidation loans or credit counselling plans, it is longer than it would take to complete a personal bankruptcy (this usually takes nine months). Remember though that you can pay off your Proposal early.

What are my Options if I’ve Done a Consumer Proposal Before?

You Need to Complete All the Terms of Your Consumer Proposal

Although you can defer two of your Consumer Proposal payments over the course of the Proposal, if you miss three payments your Consumer Proposal will be considered in default and will be annulled (essentially cancelled).

If your situation changes and you can no longer afford your Consumer Proposal payment it may be possible for you to amend your Proposal – or you could abandon your Proposal and declare personal bankruptcy (although this is less common). It’s always best to talk with your Licensed Insolvency Trustee so you can decide how to move forward.

Consumer Proposals Step-by-Step – Learn More

Your Credit Rating is Temporarily Affected

Any time you don’t pay your debts in full as per the original borrowing terms, your credit rating will be impacted in some way, and it’s no different with a Consumer Proposal.

An R7 note will be on your credit report for three years from the date you complete your Proposal, or six years from the date you filed it – whichever comes first. This is similar to credit counselling plans, and less severe than a bankruptcy filing (which would show as an R9 for six years following your discharge (release) from bankruptcy).

It’s important to understand this note is temporary and you can begin rebuilding your credit right away and even get new credit before your Proposal is complete. Tips, tools and resources around rebuilding credit are provided as part of the financial counselling sessions.

Credit Rebuilding After Insolvency – Learn More

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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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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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– 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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Some Types of Debt Can’t be Cleared in a Consumer Proposal

There are a handful of debts that won’t be cleared through a Consumer Proposal, or by any means other than paying them. The most common include:

• Child support or spousal support debts
• Court-imposed fines and debts due to fraud
• Student loans where you have been out of school for less than seven years– older student loans can be consolidated and cut just like any other debt.
  • If it’s been more than five but under seven years since you finished studies and you’re still struggling with your loan payments a court may order your government student loans be forgiven upon completion of your Proposal.

How is a Consumer Proposal Payment Calculated?

Debt repayment terms in a Consumer Proposal are flexible and tailored to your individual situation, making a Consumer Proposal a suitable debt management option in many circumstances.

Consumer Proposals filed by Sands & Associates’ Licensed Insolvency Trustees are often successful in reducing debts by up to 50-80% and some considerations to determine how much debt your Consumer Proposal could cut include:

• Your overall personal situation and finances including income, expenses, and household size.
• How much debt you have, and who your creditors are.

The rules around Consumer Proposals give you lots of flexibility in terms of how long you can stretch out your Proposal payments and how much of your debt you repay – and unlike many consolidation loans that can last seven or ten years, a Consumer Proposal will last a maximum of five years, and terms of two-to-three years are quite common.

A Licensed Insolvency Trustee will help you work out a suitable offer to your creditors that takes into account your personal financial situation including your household budget, the amount of debt you can afford to repay and other financial goals you may have.

A Consumer Proposal Starts with a Free, Confidential Consultation

When you want qualified debt advice the best thing to do is talk with a local Licensed Insolvency Trustee and have a free, confidential consultation. Sands & Associates serves residents across BC and in 30 minutes we can help you explore all your options, including Consumer Proposals.

• By the end of this conversation, you should have clear information about the next steps in the debt-free plan that you decide is right for you, and many people feel relief right away knowing that there is a way forward from the financial anxiety and debt-stress they have been feeling.

You owe it to yourself to get debt help, and you’re not alone in finding debt solutions – we’re here to help you!

Connect with a non-judgmental BC Licensed Insolvency Trustee and get started with a debt-free plan that’s right for you – book your free, confidential debt consultation today.

The post Consumer Proposal Pros and Cons appeared first on Sands & Associates.

Managing Debt With a Consumer Proposal

A Consumer Proposal can consolidate virtually all your debts without borrowing and offer to repay your creditors the portion of your debt that you can afford over a period of up to five years. You may be able to reduce your debt by as much as 50-80%, as your creditors will agree that the unpaid balance will be considered forgiven at the end of your Consumer Proposal.

• Consumer Proposals are one of only two options available to Canadian consumers that can forgive almost any type of debt, including:
  • Basic consumer debts like credit cards, payday loans, lines of credit, overdrafts.
  • Government debts such as outstanding income taxes, CERB overpayments, student loans, and more.
• Because your debts are frozen and the balance that you’ll repay (interest-free) is usually substantially reduced, your new monthly debt payments should be much more manageable than if you continued trying to make your monthly payments as before – and you’ll have a clear ‘debt-free’ date because Consumer Proposals are limited by law to a period of 60 months or less.

Your credit score or history are not qualifying factors, and a Consumer Proposal can be made by an individual who owes between $1,000 and $250,000 of debt excluding any mortgages on your residence.

• If you owe more than $250,000 there’s another type of Proposal that may be more suitable, and some different rules will apply.
• A joint Consumer Proposal can be filed by two people together (i.e. couples, business partners, etc.), doubling the upper limit to $500,000.

Read More About Debts a Consumer Proposal Can Consolidate

Consumer Proposals also offer flexibility in that you can choose to manage ‘secured debts’ (that is, debts linked to an asset) outside of your Proposal. For example, if you have a financed vehicle or a mortgage in good standing and you want to continue with those agreements, you can do so uninterrupted. As long as you continue to make the payments on your car and/or home, a Consumer Proposal will allow you to retain those assets without issue.

Sands & Associates’ Approach to Consumer Proposal 

Sands & Associates works with Consumer Proposal clients across British Columbia – here’s the approach we take with our clients:

1. Have a free, confidential, non-judgmental consultation. In this initial meeting (which could be in person at a local office near you, over the phone, or online) we’ll take time to understand your situation, needs, and goals. We’ll talk with you about all your options, including Consumer Proposals.

If you decide that a Consumer Proposal is the best fit for you and your situation, we’ll work together to determine an offer that is affordable for you, and that your creditors are likely to agree to.

2. When you’re happy with the plan, you’ll have another meeting to review and sign the Proposal documents that we’ve prepared on your behalf.

After this your Licensed Insolvency Trustee will file your Proposal with the Office of the Superintendent of Bankruptcy, the government branch that oversees this process, and send your offer to your creditors for their consideration.

3. Your creditors will have 45 days to review and consider your Consumer Proposal offer and will submit a formal vote to your LIT confirming if they are willing to accept it.

Immediately after signing the Proposal documents, you should no longer be making payments to your creditors and your LIT will take on all communications with your creditors on your behalf, so you don’t need to deal with them further.

When your Consumer Proposal is accepted you’ll make the payments you offered, complete two private, one-on-one financial counselling sessions, and fulfill any other conditions you agreed to – and at the end you’ll be issued a ‘Certificate of Full Performance’ and legally released from all debts that you included in your Consumer Proposal.

Learn More About Starting the Consumer Proposal Process

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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 

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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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Are Consumer Proposals Usually Accepted by Creditors? What Happens if They Don’t Agree? 

While your creditors do get to vote on whether they will agree to your Consumer Proposal, it can be reassuring to know that Proposals filed by Sands & Associates are almost always accepted – it’s quite rare for a Consumer Proposal to be rejected. One of the main reasons for this high rate of acceptance is that in a Consumer Proposal you are providing your creditors a better return on your balance than if you were to file for bankruptcy, which, in most cases, would result in creditors receiving nothing.

Your creditors have 45 days to consider your Consumer Proposal, file a ‘proof of claim’ with your LIT and vote. They may:

• Vote to accept your offer as filed (the debt repayment, time you’ll have to make your payments, and other terms that may be offered by you)
• Vote against your offer
• Vote against your offer as filed and ask to have a ‘meeting of creditors’
• Not vote at all (nor even file a proof of claim)

If the majority of your participating creditors (over 50% by dollar value) vote to accept your offer the Consumer Proposal will be legally binding and provide you full protection from all the creditors you included in your Proposal – even those who didn’t vote, file their claim, or who voted against your offer. For example:

• If you owe a total of $25,000 to five different creditors and only two of them who are owed a total of $15,000 vote to accept your Proposal, it will be accepted and binding on all five creditors, even if the other three (holding $10,000 of the total debt) vote against it.

How Much Debt Will a Consumer Proposal Eliminate? Learn More

Meeting of Creditors

Your Proposal can only be rejected at a meeting of creditors, and a meeting of creditors will be held within 21 days if one is requested by one (or more) of your creditors who are owed 25% or more of the total value of your proven debts.

This meeting offers an opportunity to negotiate different Proposal terms that can help your Proposal pass if one or more creditors were not happy with your original offer, and/or provide more information about your situation. At this meeting your creditors will vote to accept or refuse your Proposal, again the outcome is decided by a majority by dollar value – and in the event there is no quorum of creditors at your meeting, your Proposal is deemed to be accepted.

• In a less common case where your original Proposal isn’t accepted within the 45-day period, your creditor(s) may by more likely to accept a revised Proposal that offers more return to them, generally achieved by either increasing your monthly payment amount, or extending the time of your monthly payments.
• Prior to the meeting your Licensed Insolvency Trustee will continue to communicate with your creditors on your behalf and work to determine what terms your creditors would accept.

In the rare case that your Consumer Proposal is rejected, you have a few options to consider, including whether to amend your Consumer Proposal and refile it, or whether declaring bankruptcy is a better option for you. Your Licensed Insolvency Trustee can help you explore these remedies further and weigh the pros and cons of your options. 

What Are My Options if I’ve Done a Consumer Proposal Before?

Talk to a Licensed Insolvency Trustee About Filing a Consumer Proposal 

A Consumer Proposal can be a great solution to get a handle on problem debt – they are almost always accepted and offer many benefits compared to other solutions including consolidation loans and credit counselling repayment plans, both of which can have considerable limitations and high costs.

To do a Consumer Proposal you must work with a Licensed Insolvency Trustee, no other debt advisor can file one for you, and you can’t file one by yourself. No referral is required to talk with a Licensed Insolvency Trustee and there is no impact to your credit history either. To explore whether a Consumer Proposal could be a good fit for your situation and talk about other solutions you may want to consider, reach out to a Licensed Insolvency Trustee local to you.

• All Licensed Insolvency Trustees will offer you a free, confidential consultation and we are Canada’s official debt help experts, fully qualified and endorsed to help you find debt solutions.
  • If you’ve been advised against a Consumer Proposal by anyone other than a Licensed Insolvency Trustee, it is strongly recommend you see a LIT for a second opinion.
• LITs are neutral parties, and we will help you understand all your options. No two situations are exactly alike, and considerations can include how much debt you have, who your creditors are, as well as your income, household situation and other factors specific to you.

We understand it can feel difficult to reach out for help, and our goal is to offer you information and support in a caring, straightforward and empathetic manner. By the end of your consultation you should have a clear outline of your next steps in your debt-free plan.

Connect with a non-judgmental BC Licensed Insolvency Trustee and get started with a debt-free plan that works for you – book your free, confidential debt consultation with Sands & Associates now.

The post Do Creditors Usually Accept a Consumer Proposal? appeared first on Sands & Associates.

How Do I Qualify for Bankruptcy Debt Relief?

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

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

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

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

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

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

When is Filing for Personal Bankruptcy the Best Option?

How the Personal Bankruptcy Process Works in Canada

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

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

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

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

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

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

Bankruptcy Alternatives – Learn About Making a Consumer Proposal

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

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

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

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

Compare Your Debt Options

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

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

What Debts Can a Consumer Proposal Consolidate? Learn More

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

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

Get More Information About Your Debt Relief Options

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

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

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

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

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

Where Your Credit Score Comes From

Your credit score is a constantly changing number (between 300 and 900, with 900 being the best) that is calculated based on your credit history, and you’ll gain or lose points depending on your actions.

• Credit scores are intended to help a lender decide whether they will offer you credit, how risky it may be to do so, and the borrowing terms they will offer you.
• Because Canada’s two credit bureaus have access to different information and use their own formulas to calculate your score, you probably won’t have the same rating with both agencies.

Credit bureaus don’t disclose the exact algorithms they use to calculate your score, but some of the factors from your credit history they use include:

• Payment history: This is the most important factor. Do you pay all your bills on time, every time?
  • Note that ‘non-credit’ accounts such as your cellphone plan and special accounts like your mortgage can provide information to credit bureaus. If you’re keeping your account paid up to date this may not offer you any benefit, but, if left unpaid, these accounts are likely to reflect negatively on your credit history and score.
• Credit usage: How much credit do you have, and what types of accounts? How much of your available credit are you using? Have you gone over your limit?
• Length of history: How established are your accounts?
• Credit seeking: How many ‘hard’ credit checks are noted in your report within the last three years? Have you been seeking a lot of credit in a short period of time?
  • Credit checks are categorized as ‘hard’ or ‘soft’ hits. Hard hits may refer to checks done as you apply for credit, and soft hits may happen when a business wants your report to update a record, or when you ask for a copy of your report.

By having a general idea as to what influences your credit score, you can understand some of the actions that you’ll want to take, and which to try to avoid.

Learn More About Credit Reports (and How and Why to Check Yours)

Common Causes of Low Credit Scores

By understanding that your credit score is largely influenced by your payment history, you can consider why your score might be low. Do any of the following scenarios sound familiar?

• Making payments late, not making the full payment required, or having a payment bounce.
• Going over your borrowing limit.
• Using a high proportion of your available credit, which lenders may view as risky (even when your payments are being made as required).
• Having unpaid accounts passed to collections.
• A lot of credit checks being done, which lenders often interpret as urgent credit seeking.
• Not having enough credit history established, or closing a longstanding account which results in losing the credit history, resulting in too little information for potential lenders to consider your credit use.

Difficulty in managing debts and payments may not be the only cause of a low credit score. On the contrary, steps you may take to keep control of your finances can cause a lower credit score, such as:

• Having minimal credit history, or only having one type of credit account: This means lenders have less credit history to consider in assessing your lendability.
• Closing a credit account you are no longer using: You will lose any positive payment and credit history associated with this account.

Can I Do Anything About my ‘Bad’ Credit?

Any time you don’t pay your debts as agreed your credit score will be impacted in some way, but, if you’ve had trouble with this, know that while positive information for active accounts can be kept on your credit report indefinitely – negative information does expire.

Timing for common ‘negative information’ to expire in BC is as follows, and this can vary depending on the province / territory and credit bureau:

• Late payments and NSFs both show for up to six years from the date reported (even if you pay the past-due balance).
• Collections accounts will be removed six years from the date of your last payment.
• Judgments from court action show for six years as well.
• Bankruptcy is only shown on your credit report temporarily, for just six years after you are discharged (released).
• Credit counselling plans show for two years after your debts included in the plan are paid off.
• A Consumer Proposal will show for only three years from the date you finish it, or six years from the date it was filed (whichever is soonest).

Fortunately, as your credit history is constantly being updated, you have opportunity to take the right steps in establishing a good payment history – the combination of a strong payment history and time are the main keys to a good credit score. People who have trouble making payments, experience debt collections or judgments, and even file for personal bankruptcy can and do move on to establish a fresh credit history sufficient for new mortgages, vehicle financing, credit cards, etc. often within a quicker timeframe than they thought possible.

Consumer Proposal VS. Credit Counselling – Understand the Key Differences

Tips to Improve Your Credit Score

To create a positive payment and credit history that will grow your credit score, aim for the following, and remember to give yourself time:

• Build an account history with consistently positive credit use:
  • Make your full payments as required on time – every single time – even if your account is in dispute.
  • Reach out to your lender right away if you think you’re going to have trouble making your required payment.
• Don’t have too many credit accounts and use less than half (under a third is even better!) of the credit limit you have available on your accounts.
• Limit your hard credit checks to only what is necessary (i.e. rather than applying for many credit products, do deep research and apply only for the products that suit you best).
• Establish a consistent employment history.
• Accumulate some savings.
• Request a copy of your credit report from each credit bureau and check them for errors and fraudulent activity once a year.
  • If you find any errors or fraud, take the steps to have these issues flagged and corrected.

For many people focused on establishing a positive credit history and score, the single best thing you can do is get your debt paid off as soon as possible. Once your debt is cleared you can a) reset your debt-income balance and b) focus on establishing a new, positive credit history that is manageable and not costing you interest.

Consumers should understand there is no way to ‘fast track’ repairing your credit history. Companies that advertise such services are likely a scam, seriously misrepresenting their abilities, or trying to sell you a service or even financing that is unnecessary and/or very expensive. Watch out for anyone who:

• Makes promises or guarantees about what they can do for your credit score.
• Tries to pressure you into purchasing services or high-interest financing.
• Asks for upfront fees for their services, or who wants to charge you a referral or administrative fee to connect you with another professional.

Unqualified Debt Advisors – What Consumers Need to Know

The Number One Way to Improve Your Credit – Focus on Paying Off Your Debt

If your current debt repayment plan would require more than five years for you to pay off your non-mortgage debts, connect with a local Licensed Insolvency Trustee for some free advice.

• You can get professional insights and advice into solutions to help you get debt under control so you can move forward and bring your other financial goals into focus.
• There is no cost to talk confidentially to learn about your options, and no referral required.

BC Licensed Insolvency Trustee and President of Sands & Associates Blair Mantin shares credit rating tips and insights with Global News.

How Can a Licensed Insolvency Trustee Help?

Licensed Insolvency Trustees are Canada’s only officially designated professionals dedicated to helping people solve debt problems, and we can support you in this in a few different ways, including (but not limited to):

• Assessing your financial situation and exploring your options to deal with your debt, including refinancing, focused do-it-yourself payment plans, credit counselling, Consumer Proposals and more.
• Helping you understand your rights and remedies with regards to a debt or creditor, as well as resources and legislation that can aid you in your specific situation.
• Working together on a debt solution such as a Consumer Proposal.
  • Formal debt solutions allow many people to get their debts paid off and establish a solid credit score faster than if they were to continue trying to pay down their debt at their current pace. What’s more, you can potentially save thousands of dollars in interest charges.

Pay Off Debt Faster with a Consumer Proposal

A Consumer Proposal for example, can be used to consolidate virtually all your debt (everything from consumer credit cards, payday loans, lines of credit, etc. to government debts like CERB overpayments, tax balances and more) and cut the amount of debt you need to repay down to an amount that is affordable for you.

You’ll have up to five years to pay this reduced balance off, which is often as little as 20% of your balance, with zero interest or added fees. This can offer you advantage in several ways, short and long-term, allowing you to:

• Improve your cashflow and household budget immediately by significantly reducing your debt payment to one consolidated monthly payment that you can afford.
  • With a reduced debt payment, what else could use your financial attention? Savings, retirement, or simply more breathing room to meet your day-to-day living costs?
• Stop ongoing interest charges and/or penalties.
• Ease financial anxiety and debt-stress.
• Gain peace of mind by having a clear plan to pay off your debt and a definite debt-free date.
  • Consider what goals you have – or could have – once you’re debt-free!

In less than an hour a Licensed Insolvency Trustee can help you assess your situation and put together a customized debt-free plan, solutions, and resources to help you better manage your debt so you can move forward with your life. Your debt-free future could be closer than you think!

Take charge of your debt – book your free, non-judgmental debt consultation with a local Sands & Associates debt help expert now.

The post Bad Credit? Here’s What You Can Do appeared first on Sands & Associates.

Read on to learn how consolidating and cutting debt with a Consumer Proposal, or having debt forgiven through personal bankruptcy, impacts your personal tax filings, tax debt, refunds, and more.

How Does a Consumer Proposal Work? 

A Consumer Proposal is a special type of consolidation solution that allows you to manage virtually all your debts in one streamlined payment and cut how much debt you must repay to have your debts cleared.

• Your consolidated debts are reduced to what you can reasonably afford to repay over a period up to five years, and you may repay as little as 20-50% of your total debts to settle them in full – without any interest or added fees.
• Virtually all types of debts can be consolidated and cut in a Consumer Proposal, and you have the option to exclude certain debts such as a vehicle loan or mortgage.

Your Licensed Insolvency Trustee will fully coordinate your Consumer Proposal, taking on all communications with your creditors, facilitating your payments, and providing you with support throughout the process.

• Two private one-on-one financial counselling sessions will be conducted with you, giving you resources and tools to help you improve your finances moving forward.
• You will generally have few duties to complete besides making whatever payments you are offering to your creditors and keeping your taxes filed and paid up to date.

There are many advantages to filing a Consumer Proposal, which will allow you to avoid bankruptcy AND the cost of borrowing while you get your debts paid off for good, plus provide you with full protection from your creditors.

What Happens in a Personal Bankruptcy?

Personal bankruptcy is a legal debt forgiveness option that can allow you to have up to 100% of your debts totally forgiven, and protects you from ongoing creditor harassment, collections, legal actions, etc. The bankruptcy process in Canada is generally very straightforward and private.

• Once you file for bankruptcy your debts are frozen and your creditors are immediately prohibited from contacting you for payment or charging interest on your balances.
• The cost of bankruptcy is generally minimal compared to repaying all your debts in full (with interest), and there is no cap on how much debt can be forgiven.

Most people will retain all their assets and be “in bankruptcy” for only nine months and, in this time, you’ll work to complete a few key duties that will allow you to exit bankruptcy and consider your debts cleared:

• Have two private, one-on-one financial counselling sessions with a qualified counsellor who works with your Licensed Insolvency Trustee.
• Keep a monthly budget of your household income and living expenses.
• Provide your Trustee the information necessary to file your income tax return for the year of your bankruptcy.

Learn More About Financial and Credit Counselling with a Qualified Insolvency Counsellor

Does a Consumer Proposal Clear Tax Debt?

Yes! Consumer Proposals and personal bankruptcy are the only two options in Canada that can be used to settle or forgive government debts for less than the total balance owing. Both a Consumer Proposal and personal bankruptcy can include:

• Basic consumer accounts such as credit cards, payday loans, lines of credit, overdrafts, etc.
• Government balances including tax debt, business GST, CERB overpayment, federal and provincial student loans (private lender student loans can also be included).
• Outstanding MSP premiums, EI overpayments.
• Debts for a business that you’ve signed a personal guarantee for.
• An amount owing to an individual.
• Secured debts where the ongoing payments have been halted (such as a vehicle shortfall or mortgage foreclosure).
  • If you want to continue with your vehicle financing or mortgage, then your Consumer Proposal or bankruptcy could exclude these debts.

If you owe a government debt a Licensed Insolvency Trustee will often consider this a high priority debt, as Canada Revenue Agency collects on behalf of many of accounts and has more power than virtually any other type of creditor when it comes to collecting on an outstanding balance.

• Many people end up in incredibly stressful situations almost overnight because Canada Revenue Agency has taken steps such as freezing their bank account, garnishing their wages, or placing a lien on their property.

If you have a government (or other) debt that you cannot pay, or that you need help in managing, the best thing to do is reach out to a Licensed Insolvency Trustee local to your province right away. Staying ahead of the problem can save you a lot of stress – and money!

Read an Overview of Wage Garnishment in BC

How Does a Consumer Proposal or Bankruptcy Impact Tax Refunds? 

Although Consumer Proposals and bankruptcy have several things in common, they are quite different solutions and some of these distinctions are in how tax filings and refunds are handled.

Tax Returns and Refunds in Consumer Proposals

If you owe Canada Revenue Agency for a tax (or business GST) balance, you’ll need to ensure all your tax filings have been submitted before you make your Consumer Proposal. Your Licensed Insolvency Trustee can advise you on what to file if you are behind.

• If you typically owe money on your tax returns your Trustee may additionally recommend including a clause in your Consumer Proposal that allows you to include the exact amount of tax debt you’ll have, calculated to the day your Consumer Proposal starts – even if that return isn’t yet due. This allows you to consolidate and cut the most debt possible.
  • For example, if you start your Consumer Proposal July 5^th, you could include debt from a provisional tax return that covers your taxes from January 1 to July 5.
  • A second return would later be filed to cover from the date of your Proposal to December 31, separating the pre- and post-Proposal balances.

If you don’t have any tax debt and your returns are filed up to date when you start your Consumer Proposal, you’ll continue to file your tax returns yourself, paying any balances due and keeping any refunds ‘as usual’.

• For people who typically get a tax refund (especially one you rely on for paying annual or semi-annual expenses) this is another consideration that can make a Consumer Proposal a better option than bankruptcy.
• It’s also not uncommon for people to use their tax refunds towards making an additional payment on their Consumer Proposal, with a goal of having it paid off early.

It’s important to stay on top of your tax requirements (filing and paying) while your Consumer Proposal is in place.

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

Tax Returns and Refunds in Bankruptcy

Two tax returns will be filed for you by your Licensed Insolvency Trustee for the year that you declare bankruptcy, called pre- and post-bankruptcy tax returns. All you need to do is supply the required information to get these returns filed.

• The pre-bankruptcy return will cover the period from January 1 to the date you file for bankruptcy, and any balance owing from this return will be eliminated in your bankruptcy, along with any other balance from prior tax years.
• The post-bankruptcy return will cover the period from the date your bankruptcy started to December 31, and any balance owing from this post-bankruptcy return will be considered a new debt outside of your bankruptcy and therefore your responsibility to pay.

If there are any refunds from these pre- and post-bankruptcy tax returns (or any prior years’ returns that are filed at the time you start bankruptcy), these will be included in your bankruptcy ‘estate’ and go towards any money collected that could be distributed to your creditors as a dividend.

Subsequent years’ tax returns and balances are yours to file, pay, or collect.

Learn More About What to Expect Working with a Licensed Insolvency Trustee 

Learn More About Your Debt Options, Including Consumer Proposals and Bankruptcy

Licensed Insolvency Trustees are the best debt help resource for individuals, and the only professionals in Canada fully qualified and authorized to help you with your debt. You may be able to address your financial difficulties using the resources we can advise you on, a self-directed approach, or a legal solution like a Consumer Proposal or bankruptcy.

• Anyone can have a free confidential consultation to talk about their needs and get a plan to become debt-free – your finances do not need to be in an urgent state to qualify for help.
• By connecting with a Licensed Insolvency Trustee local to your province, you can safely get accurate advice and guidance.

The best time to confront a debt problem is in the early stages, as the issues often get worse if you don’t take action. Avoid the temptation to wait it out – you owe it to yourself to get debt help.

• Sands & Associates helps consumers across BC and we can review your financial situation together and provide you with information on a full range of options to deal with your debt.
• There is no cost for a consultation, and you are under no obligation to continue working with a Licensed Insolvency Trustee – and in less than an hour you will have clear understanding about the next steps in whatever solution you choose.

Learn about your options and get a debt-free plan that’s right for you. Book your free, confidential consultation with a non-judgmental expert at Sands & Associates today.

The post What Happens to my Tax Filings if I Make a Consumer Proposal or File Bankruptcy? appeared first on Sands & Associates.

What Professionals Offer Consumer Debt Management Services in Canada?

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

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

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

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

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

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

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

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

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

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

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

Misleading Debt Services Being Sold to Consumers

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

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

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

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

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

Am I Working with a Licensed Insolvency Trustee?

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

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

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

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

Understanding Credit Reports and Scores in Canada – Learn More

Recap – Key Takeaways for Consumers Seeking Qualified Debt Advice

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

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

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

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

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

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

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

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

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

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

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

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

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

Learn More About the Qualifications and Regulations Licensed Insolvency Trustee Have

What Does a Licensed Insolvency Trustee Do for Me? 

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

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

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

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

Preparing for Your First Meeting with Sands & Associates

How Does a Consumer Proposal Work? 

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

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

How Much Debt will a Consumer Proposal Eliminate?

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

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

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

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

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

How Does Personal Bankruptcy Work? 

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

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

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

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

Learn Why Most People Keep All their Assets in Bankruptcy

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

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

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

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

Debt Forgiveness with Personal Bankruptcy: Step-by-Step

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

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

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

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

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

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

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

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

Is a Consumer Proposal Right for Me?

Are There Alternative Debt Help Providers in Canada?

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

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

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

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

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

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