Frequently Asked Questions

Receivership is a remedy available to secured creditors to recover their debt. A receiver is a person appointed by a secured creditor or by the court to take control of a company’s assets, sell them, and repay the creditor.

Rebuilding your credit is essential after financial difficulties such as bankruptcy or insolvency. It helps you regain access to financial products and demonstrates financial responsibility to lenders.

Secured debt is a type of loan backed by collateral, such as a house, car, or other valuable asset. If the borrower defaults, the lender can seize the collateral to recover the debt. 

Insolvency refers to a financial state where an individual or business is unable to meet their debt obligations as they come due. It is not a legal process but an indicator of financial distress. 

Debt consolidation involves combining multiple debts into a single loan with a lower interest rate. This simplifies payments and may reduce overall financial strain. 

Bankruptcy is a legal process designed to help individuals or businesses eliminate their debts when they are unable to repay them. Filing for bankruptcy provides a fresh financial start but also has significant consequences.

After bankruptcy, most of your unsecured debts are discharged, meaning you are no longer legally required to pay them. However, certain debts, such as student loans (under specific conditions), child support, and alimony, are not discharged.

Personal bankruptcy is a legal process that provides relief to individuals unable to repay their debts. It allows them to eliminate or restructure their debts under the guidance of a Licensed Insolvency Trustee (LIT).

Filing for bankruptcy involves several steps: 1. Consult a Licensed Insolvency Trustee (LIT): An LIT assesses your financial situation and explains your options.2. Complete the Required Paperwork: The LIT helps you file the necessary forms and documentation.3. Notify Creditors: Your LIT informs your creditors about your bankruptcy filing.4. Attend Financial Counseling: Participate in two mandatory counseling sessions to improve your financial literacy.5. Complete the Bankruptcy Term: Fulfill all obligations set by the bankruptcy process, including surplus income payments if applicable. 

In Canada, student loans are subject to specific rules in bankruptcy. These loans can only be discharged if at least seven years have passed since you ceased being a student.

Obtaining a credit card after bankruptcy is a key step in rebuilding your credit. The timeline for getting a new credit card depends on your financial progress and the type of card you apply for. 

Bankruptcy is a legal process designed to provide relief to individuals or businesses unable to repay their debts. It involves the liquidation of assets and distribution of proceeds to creditors, overseen by a Licensed Insolvency Trustee (LIT). 

Filing for bankruptcy results in an R9 rating, the lowest possible credit score rating in Canada. This indicates that you have declared bankruptcy and failed to meet your financial obligations. 

Bankruptcy in Canada is governed by the Bankruptcy and Insolvency Act (BIA), a federal law that outlines the process for individuals and businesses to eliminate or restructure their debts while providing fair treatment to creditors. 

In Canada, personal income tax debt can be included in a bankruptcy filing. This provides relief from overwhelming tax obligations and stops collection actions by the Canada Revenue Agency (CRA). 

In Canada, student loans are subject to specific rules in bankruptcy. These loans can only be discharged if at least seven years have passed since you ceased being a student.

In Canada, child support payments are not dischargeable through bankruptcy. This means you are still required to pay any outstanding and ongoing child support obligations even after filing for bankruptcy. 

A consumer proposal is a formal agreement with your creditors to settle debts for less than the full amount owed. It allows you to avoid bankruptcy while providing a manageable repayment plan. 

A consumer proposal is a legal agreement between a debtor and their creditors to settle debts for less than the total amount owed. It provides a structured payment plan that is manageable for the debtor and agreeable to creditors. 

A consumer proposal is a legal agreement between a debtor and their creditors to settle debts for less than the total amount owed. It provides a structured payment plan that is manageable for the debtor and agreeable to creditors. 

When you file a consumer proposal, your credit rating is assigned an R7 rating. This indicates a formal arrangement to settle debts but is less severe than bankruptcy's R9 rating. 

One of the primary benefits of a consumer proposal is that it allows you to avoid bankruptcy. This minimizes the long-term impact on your credit rating and financial future. 

A consumer proposal is a formal agreement between a debtor and their creditors to repay a portion of their debts over a set period. It is administered by a Licensed Insolvency Trustee (LIT) and provides an alternative to bankruptcy. 

In situations where debt is not too excessive and somewhat manageable, a credit counselling service may be able to review and assist you with your financial situation. These organizations contact creditors on your behalf, provide education on avoiding debt and personal budgeting strategies, as well as counselling.

A credit counsellor will meet with you and determine how much you can pay each month towards your bills. The counsellor then works as a money mediator and the money you contribute is placed in a trust account before being sent to your creditors once a month. Typically you will pay the full amount of your unsecured debt over time. The credit counselling organization will provide you with a positive note in your credit file if you carefully adhere to the program.

A debt consolidation loan is a financial solution that allows individuals to combine multiple debts into a single loan. This simplifies repayment and often reduces the interest rate on the total debt. 

There may be a fee involved to open a file for your consolidation loan, in addition to regular loan payments.

Depending on how quickly you take action and begin paying off your debt, debt consolidation should have little or no effect on your credit rating. However, late payments, failure to make minimum payments or being sent to collection can negatively affect your credit rating. The longer you wait to repay your outstanding debt, the more your credit rating will be negatively affected.

As this is not a formal legal process, you choose the debts which you would like to pay down with the new consolidation loan.

In order to qualify for debt consolidation, you must have a satisfactory crediting rating and sufficient income to sustain the loan. The financial institution issuing you the loan will conduct an assessment to determine if you meet their criteria.

The total of all your debts must be paid in full plus 5% interest, usually within a period of three years, unless all creditors consent to an alternative arrangement and the Court approves it.

Eligible debts that can be consolidated include: credit cards, consumer loans and public utilities. Ineligible debts include: mortgages, student loans, along with others.

The program is only available in Alberta, Nova Scotia and Prince Edward Island. It is also available in Quebec, where it is referred to as the Voluntary Deposit Law (or formerly, Lacombe Law).

Using the Orderly Payments of Debt approach to repay debt will lower your credit rating. It is the same credit rating you would receive if you file a Consumer Proposal (R7). However, it will not be as low as the rating given to those who file for Bankruptcy (R9). Credit reporting agencies typically keep an Orderly Payments of Debt on your credit file for three years upon completion.

There is a small application cost, as well as the 5% monthly interest accrued during the repayment term.

Depending on the amount of debt and number of creditors you have, it may be possible for you to directly contact your creditors and negotiate a lower interest rate or a repayment schedule that works for you.

With informal proposals, each of your creditors will expect you to present them with a plan outlining how you can pay them back. You may also be required to submit a sworn statutory declaration outlining all of your assets, debts and income. Each creditor will negotiate with you separately, as their goal is to obtain the money that is owed to them. Explain your financial situation honestly and submit a realistic proposal with a reasonable payment schedule. Be aware, the longer the repayment term, the more interest you will be paying.

Creditors are not required, nor have any legal obligation, to arrange alternative payment terms with you. Furthermore, the creditor may be entitled to end special arrangements at any time with little to no notification. Also, this option may not stop collections agencies from calling. The more creditors you have, the more difficult it becomes to arrange an informal arrangement with each one.

Whether you qualify completely depends on the creditor you are contacting and the plan you present to them. Important factors such as the length of the repayment term and the amount of debt you have will impact their decision to accept or decline your proposal.

There shouldn’t be an initial setup cost for an informal debt settlement. The purpose of an informal debt settlement is to lower the interest rate on your payments and potentially extend the payment period. Additional costs typically result from the accumulated interest charges over a longer repayment period.

It is important to get any arrangement you make with your creditors in writing. While it may not be a legally binding contract, it is a useful document when discussing the termination of your informal debt settlement. If the creditor refuses to reinstate the informal debt settlement, you can file for a Consumer Proposal, which is legally binding when administered by a Licensed Trustee.

An informal debt settlement should be realistic. If your settlement is out of your financial reach you should consider other options to deal with your debt.

Insolvency occurs when an individual or business is unable to meet their financial obligations as they come due. It is a financial state distinct from bankruptcy, which is a legal process. 

A Licensed Insolvency Trustee (LIT) is a federally regulated professional who helps individuals and businesses manage their debts. They are authorized to administer bankruptcy and consumer proposal processes in Canada. 

A discharge releases you from the legal obligation to repay the debts you had as of the date you filed for bankruptcy, except for specific types of debts that are excluded by the law.

• Much like buying a home it is recommended that you have a down payment for your vehicle purchase.
• Make sure your credit report is accurate before you apply for credit through a financial institution or car dealership.
• Create a budget! What payment is affordable to you? Don’t borrow more than you can afford to repay.
• Vehicles depreciate quickly and often need repairs before you have finished paying the loan. Ensure you budget for car maintenance and insurance.
• Do your research, there are many finance companies willing to lend to you and many even have ‘credit rebuilding’ programs. Watch for high interest rates, hidden charges and finance loans for more than five years

If you are discharged from bankruptcy you are once again free to liquidate your assets. However, before cashing in your RRSP’s or other investments there are tax implications and lost future income to consider. It is recommended that you consult with a financial planner to determine the costs and benefits of doing this.

No, whether you can obtain credit after your discharge from bankruptcy will depend on your ability to convince lenders of your financial maturity and ability to repay the debt. There are no guarantees, no one is required to give you credit.

• Do not rely on someone else to rebuild your credit. You must be the driving force.
• Clean up your credit report — make sure all errors are corrected.
• Obtain new credit — a secured credit card, small secured loan or RRSP loan.
• Make sure the new credit is reported to the credit bureau (not all credit products are reported).
• Start by asking your financial institution what products they have available to help you rebuild your credit. It’s good to build a relationship with the financial institution you have already been dealing with during your Bankruptcy or Proposal.
• Never miss a payment. In fact, pay before the due date. Follow the good budgeting and money-management tips you reviewed in your counseling sessions with your LIT firm.
• Save for a down payment on a car or house.