As a licensed debt help professional, some of the saddest words Licensed Insolvency Trustee Blair Mantin hears are “I didn’t know I had any options”. Like many complex areas of consumer legislation and laws – what you don’t know can hurt you.
37.5% of respondents in the 2019 BC Consumer Debt Study who eventually found a solution by making a Consumer Proposal or filing personal bankruptcy said they waited to seek professional debt help because they thought there was no solution to their situation.
With Sands & Associates’ latest BC Consumer Debt Study recently released, Senior Vice-President Blair Mantin joined Global News to dispel some of the top myths about debt solutions, as well as to provide a few fast facts about debt help that he feels consumers should know the truth about.
Watch the clip here, and read more below:
Debt Help Myths Debunked
Myth: There’s No Way to Get Tax Debt Forgiven
Many people mistakenly believe that if you owe money to the government for debts such as income taxes, business GST or even government student loans that there is no way to have those debts forgiven – this is false:
- In Canada there are two options that can allow you to settle government debts for less than you owe, or have the debts written-off completely – making a Consumer Proposal or filing a personal bankruptcy.
- Whether you are facing a wage garnishment or bank account seizure because of your outstanding Canada Revenue Agency debt, or you’re avoiding filing your tax returns because you know you owe money, both a bankruptcy or Consumer Proposal will provide immediate relief from collection activities.
Fast Fact: Debts Can Become Statute-Barred
In BC, the Limitations Act caps the period of time a creditor has within which to take legal action against you (i.e. sue you) for a debt you owe. If it has been two years or more since you made a payment or acknowledged the debt in writing, then your creditor may not have further recourse to actually collect the debt from you.
There are some exceptions to this, such as government debts – and certain actions can “reset the clock”.
Read an Overview of BC’s Statute of Limitations on Debt
Myth: Bankruptcy Permanently Impacts Your Credit
The idea that filing for personal bankruptcy will be permanently noted on your credit history, or prevent you from obtaining future credit for nearly a decade is false:
- A first-time bankruptcy will be noted on your credit history for six years following your completion (i.e. “discharge”) of the bankruptcy; this is the same amount of time that many other “negative” transactions such as a missed, late or bounced payment, or a judgment are reflected.
- During the period when the bankruptcy is on your credit history it is still possible to apply for and obtain new credit. With the right behaviours and steady income, it is possible to successfully re-establish credit and even qualify for a new mortgage within two-to-three years of completing a bankruptcy.
Myth: You Lose Everything if You’re Bankrupt
Many people fear that filing personal bankruptcy means that all their assets must be surrendered – this is false. The reality is that most people keep all their assets when they file bankruptcy:
- BC law sets a minimum level of assets that each person is entitled to keep if they file for personal bankruptcy. This includes amounts for items such as household furniture, a vehicle, your RRSPs, even home equity.
- If you have a vehicle or home that is being financed you have the option to continue with those payment agreements during the bankruptcy, if you choose to do so.
Fast Fact: Licensed Insolvency Trustees are the Only Government-Regulated Debt Help Professionals
Although there are many professionals and organizations who advertise debt management services, in Canada only Licensed Insolvency Trustees are authorized, endorsed and empowered by the government to provide consumers with debt help options that allow you to be released from your debts.
No referral is needed to connect with a Licensed Insolvency Trustee and confidential meetings to discuss your situation and options are always free.
Learn about the 4 Financial Professionals Everyone Should Know
Myth: Bankruptcy Lasts 7 Years
A bankruptcy may be reflected on your credit history for six years, but the notion that the process lasts for seven years is false:
- The vast majority of personal bankruptcies last for only nine months, and cost around $200 per month for that nine-month bankruptcy period.
- Nearly 80% of individuals who enter bankruptcy proceedings are eligible to be automatically discharged (released) after nine months – there is no need to attend a court hearing or to ask your creditors’ permission to be released from bankruptcy.
Fast Fact: Consolidation Doesn’t Have to be Done by Borrowing
Many people considering how to better manage their debts believe that their options amount to debt consolidation loans, credit counselling programs, or bankruptcy – these are not your only options!
Consumer Proposals are an effective legal debt solution that allows you to consolidate your debts, repaying what you can afford, with the unpaid balance being forgiven by your creditors. This specialized consolidation option requires no borrowing and interest charges (like with a consolidation loan), nor does it require you to repay the full amount with added professional fees (such as credit counselling).
Connect with a non-judgmental debt help professional in a local BC office near you today – book your confidential free debt consultation and get a plan to become debt-free.