Although many people considering debt restructuring solutions first turn to borrowing with debt consolidation loans and think of personal bankruptcy as a last resort, there are many situations where filing a personal bankruptcy \u2013 or consolidating without borrowing using a Consumer Proposal – can be a better solution for getting out of debt.<\/p>\n
As Licensed Insolvency Trustees every year we help thousands of individuals and business owners get a plan to deal with their debts and achieve a financial fresh start. We\u2019ve put together some information to help British Columbians better understand some of the considerations and general processes involved with getting debt help and evaluating potential debt management choices. Read on to learn about common indicators that bankruptcy may be your best debt option, and when a Consumer Proposal can be a better debt solution.<\/p>\n
It is always best to discuss your specific situation with a qualified Licensed Insolvency Trustee or Insolvency Estate Manager directly \u2013 you can even <\/em>connect with a Sands & Associates professional<\/em><\/a> from the comfort of your home.<\/em><\/p>\n There are several considerations Licensed Insolvency Trustees take into account when helping someone assess their financial situation and the options that might be most suitable to help them address their debts.<\/p>\n When you meet with a Licensed Insolvency Trustee or Insolvency Estate Manager, you could expect them to ask about the following:<\/p>\n Once we have a better idea as to your circumstances and any specific financial challenges you may be facing, we\u2019ll discuss potential debt options together. Depending on your situation, you could have several viable choices to consider utilizing to get out of debt, including:<\/p>\n Use our Free Online Debt Options Calculator<\/em><\/a> to Compare Payment Scenarios<\/em><\/p>\n Since no two situations are alike, there is no single definite answer to \u201cwhen is bankruptcy best\u201d \u2013 but there are a few factors that could indicate a bankruptcy may make sense as a solution for debt relief and a financial fresh start:<\/p>\n Your income is very low or uncertain<\/u><\/p>\n Income is a key factor to consider in virtually all debt options, whether you are attempting to qualify for a consolidation loan, repaying debts in a credit counselling plan, or filing bankruptcy:<\/p>\n You have few assets (if any)<\/u><\/p>\n Lenders often use a borrower\u2019s assets such as real estate or a vehicle as collateral or \u2018security\u2019 against consolidation loans \u2013 many financial institutions will not extend you a consolidation loan if you do not have enough assets to borrow against.<\/p>\n Although the assets that you have will be noted when assessing the option, most people keep all their assets when they file personal bankruptcy, due to provincial exemption allowance laws. These exemptions include provisions for assets including (but not limited to):<\/p>\n You may also continue with vehicle financing in place if you choose to declare bankruptcy or make a Consumer Proposal to your creditors. Vehicle loans or leases, as well as mortgages are treated differently than other creditors such as credit card lenders. <\/em><\/p>\n Learn more about How Bankruptcy Protects Personal Assets<\/em><\/a><\/p>\n Your ability to repay a meaningful portion of your debt is unlikely<\/u><\/p>\n Although lenders may not specifically consider whether your household situation and living expenses leave enough money for you to comfortably repay your loan, this is a key factor that you should consider before agreeing to any financing.<\/p>\n Because bankruptcy payments are based primarily on household income and not the overall amount of your total debt, your unique circumstances are taken into consideration. If your income is above a government-set threshold, you may repay a small portion of your debts in a bankruptcy, but this is generally far less than repaying the entire debt – with or without interest.<\/p>\n In situations where you can repay a portion of your debt, a Consumer Proposal may be an ideal solution that allows you to cut your debt, while avoiding filing bankruptcy.<\/p>\n As with considering personal bankruptcy, no two situations are exactly alike \u2013 but in many cases where a person has some means of paying a manageable amount of their debt, Consumer Proposals can be a great option in a variety of circumstances – they are very flexible, tailored to each person\u2019s circumstances.<\/p>\n A Consumer Proposal is not the same as bankruptcy, and provides an affordable alternative to other consolidation options including:<\/p>\n Consumer Proposals are a unique type of legal debt consolidation that will allow you to combine virtually all types of debts into one (usually monthly) repayment plan, automatically stopping further interest. No borrowing is involved with a Consumer Proposal, and your creditors will be prohibited from contacting you for further payments or collection actions. Some points to know about Consumer Proposals:<\/p>\n A Licensed Insolvency Trustee can help you evaluate whether a Consumer Proposal could be your best solution to consolidate your debts and get a financial fresh start and will work with you to offer a suitable proposal to your creditors.<\/p>\n Browse Consumer Proposal FAQs Here<\/em><\/a><\/p>\n To qualify for bankruptcy or making a Consumer Proposal in Canada you must be insolvent \u2013 this means that you need to:<\/p>\n These \u201cqualifiers\u201d are very broad, which allows virtually anyone access to legal debt solutions should they find themselves needing help.<\/p>\n As outlined previously, there are many factors to consider in determining which debt management solution may be the best to deal with your debts \u2013 for example, just because a person is insolvent would not necessarily point to bankruptcy as the ideal option – and a Licensed Insolvency Trustee or Insolvency Estate Manager can help you assess your situation and guide you through the process.<\/p>\n There are also some areas of your finances that are not<\/em> factors in whether a bankruptcy or Consumer Proposal may be ideal choices for you. Contrary to what many people may believe, considerations such as your credit history, credit score and account standings do not impact your eligibility to access debt help solutions like bankruptcy or Consumer Proposals.<\/p>\n There is no need to wait until you are facing a situation of extreme stress and financial crisis before connecting with a Licensed Insolvency Trustee. <\/em><\/p>\n Some people may have an \u2018ideal\u2019 credit history, while others may have low scores. In fact, as many as 70% of people who file for personal bankruptcy have excellent credit scores as they continue to make all of their minimum payments up until the point they declare bankruptcy.<\/p>\n Although we\u2019ve broken down several considerations, there are many variables to your unique situation \u2013 as Licensed Insolvency Trustees we would always encourage you to connect with a local representative directly before ruling out potential options and committing to any self-assessed debt solution. We are here to help you make informed decisions \u2013 debt help without judgment.<\/p>\n Get debt advice, understand the debt solutions available and get a financial fresh start \u2013 <\/em><\/strong>book your free confidential consultation with Sands & Associates now<\/em><\/strong><\/a>. Our debt help services are available across BC.<\/em><\/strong><\/p>\nAssessing your Debts & Resources<\/strong><\/h2>\n
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\u00a0<\/strong>\u201cIs it Better to File Bankruptcy?\u201d<\/strong><\/h2>\n
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\u201cWhen is it Better to Make a Consumer Proposal?\u201d<\/strong><\/h2>\n
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How Do Consumer Proposals Work?<\/u><\/h3>\n
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\u201cDo I Qualify for Bankruptcy or a Consumer Proposal?\u201d<\/strong><\/h2>\n
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