What is Contingent Debt and How Can I Manage It?
Usually, when debt is discussed, it is debt that already exists.
However, there are times when a future debt needs to be taken into account.
Contingent debt is debt that will most likely occur in the future.
For example, a person might be facing legal action that they are sure they will lose, or there might be a debt that will be fixed in a bankruptcy proceeding.
There is an event that must occur for the debt to become fixed in the future.
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If a debt doesn’t exist yet, why does it matter?
It’s still an important factor to take into account when assessing finances.
It might not be having an effect now, but it will soon make a difference to an individual’s finances.
A new debt will affect the person’s expenses and might make it difficult for them to manage their cash flow.
Contingent debt can be taken into account when making the decision to file bankruptcy.
Such a debt might present an issue on its own or could be one of several financial issues that need to be taken into account when considering bankruptcy, a consumer proposal, or any other financial options.
The Bankruptcy and Insolvency Act allows contingent debt to be considered.
When a claim is made for a contingent debt, it must be determined as provable, and the value of the claim needs to be determined too.
When filing for bankruptcy, these debts will become due after bankruptcy has been filed, but the obligation or expectation of paying it exists before the bankruptcy.
A consumer proposal or bankruptcy can allow for an expected debt to be settled in an easier manner, which is supervised by the Bankruptcy Court.
Navigating contingent debts when considering bankruptcy is not clear-cut.
It’s important to have the help of an expert in these matters who can help with assessing how an ongoing or future debt may affect filing for bankruptcy.
A Licensed Insolvency Trustee is the professional that you want to turn to when dealing with bankruptcy in Canada.
They are licensed and qualified to work with debtors and help to resolve financial problems.
A trustee can provide advice about whether a future debt is one that might affect filing bankruptcy, and they can help with all other issues surrounding insolvency too.
The issue of contingent debt can be complicated, so it makes sense to seek professional help in dealing with it.
If you think that future debt could affect your financial situation, you can look for advice on the best options for addressing it.
For more help understanding ongoing debt and how it impacts the decision to file bankruptcy, contact Bankruptcy Canada.
We can make it easy for you to find a Licensed Insolvency Trustee and provide advice for navigating the process of bankruptcy or a consumer proposal.