Frequently Asked Questions
What must I know when meeting with an Insolvency Advisor?
When you need to meet with any Insolvency Advisor, it is very important to have references and to know of experiences that other persons may have had. You must be sure that he/she understands your concerns and that he/she has the experience to deal with this type of situations. You must feel at ease with the Insolvency Advisor; this must be a receptive and understanding person. At the same time, the Insolvency Advisor must offer sufficient information so that you may make an informed decision; do not feel under any pressure on the first meeting. Not all the Insolvency Advisors are alike. Here are some tips you should know before meeting with an Insolvency Advisor.
Which are the first signs of financial difficulties?
- Are you turning to credit to cover monthly expenses?
- Did you deplete your credit facilities and are unable to make your monthly payments or make your payments against capital?
- Are you remaining with no cash to make your monthly payments?
- Do you frequently turn to overdraft on your banking account?
- Are you only paying the monthly minimum to credit cards accounts?
- Are you asking for new loans in order to pay the old ones?
- Are you behind on your rental expenses, mortgages or utilities?
- Has any of your creditors urged or sued you?
- Do you constantly receive invoices or accounts expirations notices?
- Is your salary being garnished?
- Are money problems causing you problems in your family?
- Do you frequently feel tormented because of your money problems?
If you answered yes to any or all of these questions, it is strongly recommended you seek advice from an Insolvency Advisor. Remember, the sooner you assess your financial situation, the more options you will have to be in control and resolve your financial problems.
Possible solutions you encounter depending on you situation:
- Advising on financial subject and budgets
- Possibility of obtaining loans for consolidation of debt if you act on time
- Informal arrangements with creditors (credit counselling)
- A proposal to creditor (a formal payment arrangement)
- Bankruptcy protection
What is the reputation of the Insolvency Advisor?
- Do you have references and know of experiences that other persons may have had with this advisor?
- Is the Insolvency Advisor known to be a highly understanding, receptive and empathic person to deal with persons that have this so-stressing type of situations?
- Is the Insolvency Advisor prepared to provide you with sufficient information without forcing you to make a decision on the first meeting?
- In the first meeting, does the Insolvency Advisor present oneself as a sensible person that helps and understands your problems?
- Does the Insolvency Advisor provide you with different possible alternatives to eliminate your financial problems?
- Is the Insolvency Advisor experienced
What must I obtain on the first meeting with an Insolvency Advisor?
It is essential for you to feel at ease with your Insolvency Advisor. After all, this Advisor is the person who is going to guide you during a very difficult period of your life. At the same time, the Insolvency Advisor must offer sufficient information so that you can make an educated decision; do not feel under any pressure on the first meeting. After the first meeting, you must well understand what needs to be done to recuperate your financial freedom and your peace of mind. You must have a complete panorama of your financial situation, including the amount of your debts, the value of your properties, your monthly fixed income and expenses. At the end of the meeting, you should obtain different available options, and at the same time, you will know what can happen to your diverse properties, according to the different options.
What is a Proposal to the Creditor and how it can help me to resolve my case?
Debt management allows you to reduce the amount of your debts and prolong the time that you have to pay them. When you present a Proposal, the interest stops. After the proposal is accepted, and you make the agreed payments without interest, the total of your debts is considered to be liquidated. The proposal allows you to keep all your properties and at the same time it reduces the load of your debt.
Which are the advantages of a Proposal to the Creditor?
The proposal to the Creditor allows you to adjust your monthly payments according to your personal situation, keep your properties and accumulate more properties with no danger of leans, stop interest payments, and stop the most part of suits properties. Usually, your creditors accept an amount lower than the total payment; your degree of solvency is less affected that in the cases of a bankruptcy. However, to prepare a Proposal can be very complex; therefore, it is important to rely on a qualified Insolvency Advisor. This way, you receive the best possible advice without having to directly deal with your creditors.
What is bankruptcy protection?
A bankruptcy is a legal process that immediately stops all collections and actions of the creditors, including demands, properties and salary; gives you the opportunity of releasing from your debts and the chance of a new beginning. This process includes counselling sessions that will help you recover control over your finances. In the majority of cases you can, inclusively, keep properties, such as your home and your automobile.
How do I know which is my best option?
May it be a Proposal to the Creditor or a Bankruptcy protection, both options present advantages and disadvantages depending on your personal situation. In order to be able to understand which the best option for you is, it is wise to consult with an Insolvency Advisor who will be able to help you to organize a plan of action that best suites you.
How a Proposal to the Creditor or a declaration of bankruptcy will affect my credit record?
If your payments are delayed, it is probable that the credit bureau may have been notified and the record be ruined. In spite of this, when a proposal or a bankruptcy declaration is presented, the credit bureau is notified. A first bankruptcy remains registered in your record during a six years period; a second bankruptcy during 14 years; a proposal to the creditor remains registered in your record during a three years period after having cancelled your Proposal. During the consulting sessions you learn about some tools to begin constructing the credit on an immediate form.
What is the meaning of a debts discharge?
The debts discharge is the legal process of a bankruptcy that will release you of your debts. Generally, in your first bankruptcy the discharge takes effect after nine months. If you have declared a bankruptcy more than once, the process lasts approximately 15 months.
What debts are not affected by a bankruptcy or by a Proposal to the Creditor?
The bankruptcy process alleviates persons from all the normal debts, including credit cards, banking loans and debts that your may have with the Ministries that are responsible for taxes (Canada Revenue Agency). However, there are certain debts that can not be extinguished, including food and sons’ maintenance pensions; indemnifications for damages and prejudice, corporal damages, sexual assault or death caused by negligence; Court’s fines including traffic infractions; responsibilities in case of fraud and student’s loans of less than seven years. With the help of an Insolvency Advisor, you can be able to stop legal actions interposed by these creditors until your rehabilitation, and/or reduce the amount of your debt.
I am not in the position of paying my student's loan. What must I do?
If you declare a bankruptcy or make a Proposal within the seven years after leaving school, the actual legislations rule that you must pay your student’s loan. In spite of this, you can reach a certain level of protection when presenting a Proposal or declaring a bankruptcy. These protections create a period during which the authorities in charge of the student’s loans can not initiate a legal action against you. Besides, they allow you to pay your debts that are not student’s loans in a much more organized and manageable manner, which provides you with a future cash flow more solid in order to deal with your future student’s loans.
Will the Canada Revenue Agency accept the presentation of a Proposal in relation with taxes that I owe?
In many cases, the Canada Revenue Agency (CRA) is treated as a regular creditor, and it can accept or reject you proposal, just the same as the other creditors. The CRA has recently created specials teams for situation of proposals and bankruptcies with the finality of handling these situations.