Debt, Bankruptcy & Consumer Proposals With a Licensed Insolvency Trustee

Exploring Bankruptcies & Consumer Proposals With a Licensed Trustee

Debt, Bankruptcy & Consumer Proposals With a Licensed Insolvency TrusteeIt’s no secret that financial hardship and debt go hand in hand. Overwhelming debt can put a significant strain on your financial health, leading to additional debt and further problems. In other instances, unexpected life events or circumstances might force you to take on debt to meet shortfalls. Regardless of the cause, being in a state of high debt or financial instability can be incredibly stressful. Fortunately, there are professionals like licensed insolvency trustees who can help you navigate these murky waters.

Who Are Licensed Insolvency Trustees (LITs)?

Licensed Insolvency Trustees, or LITs, are individuals certified by the federal government to oversee and resolve debts according to the Bankruptcy and Insolvency Act (BIA). Unlike your relationship with a lawyer or other professionals, the relationship with a trustee is built on respect, fairness, and strict adherence to the law. Their primary role is to protect the rights of both the debtor and creditors and ensure that the process is carried out legally and ethically.

Understanding the Fear of Bankruptcy

One of the most common fears people have when considering bankruptcy is the thought of losing everything they own. Yet, the reality is that bankruptcy and consumer proposals are meant to provide individuals with a fresh financial start. They come with resources and support, such as debt counseling, that can help individuals learn how to manage their finances more effectively.

The Truth about Financial Hardship

Many people fear that their financial hardship will become public knowledge. However, unless the trustee has to contact the employer to stop wage garnishments, employers will generally remain unaware of their employees’ financial difficulties. Bankruptcies are not published in newspapers or made general knowledge, providing a level of confidentiality to individuals.

Bankruptcy or Consumer Proposal?

Choosing between bankruptcy and a consumer proposal depends on your personal circumstances. If your income barely covers your household expenses and leaves little to pay down your debt, bankruptcy might be the best solution. On the other hand, if you can afford monthly payments but struggle with the total debt and interest, a consumer proposal might be a more suitable solution.

Determining the Cost of Bankruptcy

The cost of bankruptcy depends on several factors, including your income, family size, assets, and whether it’s your first bankruptcy. A trustee’s fee, which covers the administrative costs of the bankruptcy, generally runs around $2,000. However, the first meeting with a trustee is free, during which they will explain all your options, including potential costs.

Calculating the Cost of a Consumer Proposal

The cost of a consumer proposal is based on your budget and what you can afford to pay. The trustee will work with you to determine a payment plan that fits within your budget. The fee for the proposal is taken from the payment amount, with no additional costs. The amount a trustee is allowed to retain to cover their administrative costs is regulated by the government.

The Duration of Bankruptcy

The length of bankruptcy varies depending on your specific situation and can range from 9 to 21 months. Upon the completion of this period and after fulfilling all the bankruptcy duties, individuals receive their discharge certificate, their debts are cleared, and their bankruptcy is officially over.

The Duration of a Consumer Proposal

The length of a consumer proposal typically spans 3 to 5 years. Once all payments are made, individuals are discharged, and their debts are eliminated.

Impact on Credit Reports

Both bankruptcy and consumer proposals stay on credit bureau reports for a period of 6 years from the discharge date. Though this may seem like a long time, you are not considered bankrupt during these 6 years, and you can take steps to rebuild your credit.

Rise in Consumer Proposals

There has been a notable increase in the number of consumer proposals over bankruptcies, demonstrating that people are becoming more aware of this option. While they may be debt-poor, they are income-rich, and a consumer proposal can provide them with relief from minimum payments and escalating interest, enabling them to finally become debt-free.

Remember, financial difficulty can happen to anyone, regardless of income bracket or region. It’s nothing to feel ashamed about, and professionals like licensed insolvency trustees are here to help you navigate your way back to financial stability.

Find Your Personal Debt Relief Solution

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