If you were facing a serious financial problem because of debt, would you know what legal options, rights and remedies were available to you? The stressful reality many Canadians face is that they don’t know the facts about how to manage a debt problem, or where to turn to for debt help.
November is Financial Literacy Month in Canada – to help viewers learn more about how to manage a debt problem, Blair Mantin of Sands & Associates joined Breakfast Television Vancouver for a segment highlighting “5 things about debt that you don’t — but should — know.”
Watch the clip here and read more below:
Fact: You can write-off government debt.
Owing money to the government for things like student loans, income tax debt, unpaid GST (and more) can feel overwhelming – especially since Canada Revenue Agency is a very powerful creditor.
There are only two methods of dealing with government debts in Canada:
- Filing bankruptcy will effectively wipe out your government debts; or
- Making a Consumer Proposal will allow you to negotiate a deal to repay only a portion of your government debts, while the remaining balance is written-off.
Fact: You are not responsible for your spouse’s debt.
Although many people believe otherwise, marrying your partner does not automatically make you responsible for paying off their debt.
Unless a spouse or common-law partner has specifically signed on to be responsible for their partner’s debts (such as being a co-signer), there is no obligation to pay a partner’s debt based on the marriage or cohabitation alone. A separation or divorce however could trigger some responsibility for debts.
Fact: Most people who file bankruptcy keep all their assets.
Laws in BC set a minimum level of assets that a person is entitled to keep in the event they claim personal bankruptcy:
- These laws include allowances for household furniture, your vehicle, tools of the trade and even RRSPs.
- Got a mortgage or car loan? No problem – as long as you’re maintaining those payments, most people will keep their home or vehicle too.
Fact: Your credit score will recover from bankruptcy.
If a person has never been bankrupt before, their bankruptcy will automatically be purged from their credit history six years after their bankruptcy is finished. With proper rebuilding steps new credit can be re-established within 2 or 3 years, sometimes even less.
Fact: Your credit rating is not a good indicator for financial health.
A credit score is in essence a fluctuating number, based on transactional information. It does not give a complete picture as to a person’s cash-flow. For example:
- A person who owns a home with no mortgage and pays cash for their daily expenses may have a low credit rating as there wouldn’t be enough credit information available to calculate a score;
- A person might have a high score because they are maintaining their debt payments, while “off the page” they are simply shuffling money around each month and unable to be debt-free;
- A person who has just finished a bankruptcy may have a low credit score, but they have no debt and are free to start rewriting their credit history.
Ready to tackle your debts and get a financial fresh start? We’re here to help.
Book your free, confidential consultation with a Sands & Associates debt management professional today!