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 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.

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.