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I’m struggling to keep up with monthly payments, but I really don’t want to file for bankruptcy. Are there any other options?
Bankruptcy is not the option to pursue first, as there are many other alternatives to choose from. A popular bankruptcy alternative is a consumer proposal, which allows you to pay back your debts over a longer period of time.
How do I know if I qualify for a consume proposal?
Candidates for consumer proposals should have a stable source of income, and must have the ability to pay back the loans if given a suitable time frame. You should also have at least $500 in debt.
Why should I choose a consumer proposal over the other alternatives?
Consumer proposals have a number of advantages including a maximum period of five years, interest is frozen immediately after you file, you can negotiate with your creditors to only pay back a fraction of the debt, wage garnishments will not continue, and your creditors will be “stayed” and will not be able to pursue legal action.
How do I get started?
You will first want to find a licensed bankruptcy in Kelowna to carry out the proposal. Once you have selected one, they will examine your financial situation, and determine a likely amount that you could afford to pay back each month.
Do all of my creditors have to agree with the proposed amount?
Under the Bankruptcy and Insolvency Act, all of your creditors will have 45 days to decide if they approve the monthly amount. If 50% or more approve it, it is considered acceptable by all. 15 days later if there are no objections, your proposal will be approved by the court, and you and your creditors will be bound to the terms of it.
What if a majority does not approve my proposal?
If 25% or more do not agree with the terms of the proposal, your trustee will need to call a mandatory meeting of creditors. With the help of your trustee, you and your creditors will discuss a proposal that is viable for everyone.
What will happen if I miss a monthly payment?
During the proposal you are allowed to miss up to two payments without penalty. Your trustee will simply add those payments onto the end of the proposal. However, if any more than two are missed, your proposal will fall apart, your creditors will be able to apply to have your wages garnished, and interest charges will be added to all debts.
Will my credit rating be affected by a consumer proposal?
Your credit rating will be altered to show your current situation, and will likely remain that way for the duration of the proposal. A note will also be attached to your report for up to seven years.
How much will a consumer proposal cost me?
The fees for your trustee will be laid out by the Superintendent of bankruptcy. The basic costs of the actual proposal will be determined by your monthly income, your assets, and the size of your family.
Before going ahead with a consumer proposal we suggest contacting a licensed bankruptcy trustee in Kelowna. The trustee will advise you on which bankruptcy alternatives would be best for you, and will guide you through the process of whichever option you choose.
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