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Are you looking for advice or help in managing your debt? Licensed Insolvency Trustees are Canada’s official debt help experts. Read on to learn why, how, and what to expect when you work with a Licensed Insolvency Trustee, from confidential consultations and debt repayment planning to Consumer Proposal debt consolidation and bankruptcy debt forgiveness.

When and Why Would I Work with a Licensed Insolvency Trustee? 

A Licensed Insolvency Trustee is a legally qualified and federally endorsed debt solution expert. We are Canada’s only official debt help professionals, and if you are facing a challenge in managing your debts, we are the best people to turn to. We assist people who have many different needs and circumstances, such as:

  • You’re worried about or struggling with debt, be it your monthly payments, or how to effectively pay your debt off.
  • You want professional advice or support in making a plan to repay your debt.
  • Your payments have fallen behind (or are about to), and/or accounts have gone to collections.
  • You are dealing with a difficult creditor or aren’t sure if a debt is still collectable.
  • You want to understand the resources available to help you manage or restructure your debt.
  • You are seeking debt relief or forgiveness for debt you can’t afford to repay.

Learn More About the Qualifications and Regulations Licensed Insolvency Trustee Have

What Does a Licensed Insolvency Trustee Do for Me? 

A Licensed Insolvency Trustee’s job is to help people resolve their debt problem, and this may be achieved through multiple solutions. What we’ll first do is have a free, confidential consultation together to better understand your situation, and review all your options.

During this meeting, which can take place in person, over the phone, or online, a Licensed Insolvency Trustee will focus on explaining your rights and remedies so you can better understand your situation, and all the options available to you, including:

  • Resources and strategies you can incorporate into do-it-yourself debt repayment, and how to prioritize your debts.
  • Refinancing options, informal credit counselling services, and their pros and cons.
  • Consolidating and cutting debt using an interest-free Consumer Proposal.
  • Debt forgiveness through declaring personal bankruptcy.

In less than an hour you will have clarity on your situation, and an outline of next steps in the plan you decide to move forward with. If you would like to continue working with a Licensed Insolvency Trustee on a debt solution that we offer (typically a Consumer Proposal, or bankruptcy), we’ll set up a further meeting to work on the next steps together.

Preparing for Your First Meeting with Sands & Associates

How Does a Consumer Proposal Work? 

Consumer Proposals have become the debt solution of choice for people who want to legally consolidate and cut their debt and have many benefits that can dramatically reduce both your debt repayment costs and the time required to get your debts cleared. Here is a basic outline of how to consolidate your debt with a Consumer Proposal:

  • Working with a Licensed Insolvency Trustee you’ll come up with a formal offer to pay your creditors the portion of your balance that is affordable for you.
  • Your total debts will be combined in this one consolidation plan, and you’ll usually make monthly payments through your Licensed Insolvency Trustee until the Proposal amount you’re offering has been paid.
    • Virtually all of your debts can be included in a Consumer Proposal – everything from credit cards to payday loans, CERB overpayments, Canada Revenue Agency tax debts, student loans and more.
    • Debts can typically be cut by as much as 50-80% and you can take up to five years to complete your Proposal payments.
    • Your creditors will agree to write-off the unpaid balance at the end of the Consumer Proposal.
  • In a Consumer Proposal your debts become ‘frozen’ and because this legal solution is not a loan, you won’t be charged any further interest by your Trustee or creditors as you work through the payments.
    • Your creditors will not be allowed to continue any collection or legal action, and they can’t change their minds and ask you for more money once the Proposal is in force.
    • Your assets and income are protected by your Consumer Proposal.

How Much Debt will a Consumer Proposal Eliminate?

What Role Does a Licensed Insolvency Trustee Have in a Consumer Proposal? 

Your Licensed Insolvency Trustee has several main duties in your Consumer Proposal, including:

  • Developing your Consumer Proposal and managing all administrative requirements.
    • Preparation and filing of legal documents needed to start and conclude your Consumer Proposal.
    • Issuing you a formal “Certificate of Full Performance” once your Consumer Proposal terms have been completed.
  • Dealing directly with your creditors, so you don’t have to.
    • Notifying your creditors of your Consumer Proposal, and if needed, negotiating with them.
    • Coordinating your payments and making the distributions to your creditors.
  • Providing you two private, one-on-one financial counselling sessions.

Your Licensed Insolvency Trustee (or Insolvency Estate Manager) will also be available for support to you throughout the course of your Consumer Proposal, which can be over a period up to five years.

Learn More About the Steps to Consolidating Debt with a Consumer Proposal

How Does Personal Bankruptcy Work? 

If you’re unable to repay your debts and a Consumer Proposal isn’t a good option, bankruptcy is another legal debt solution governed by the Bankruptcy and Insolvency Act in Canada that allows you to get debt relief, and have your debts written-off by creditors – completing a personal bankruptcy can have virtually all your debts forgiven.

  • No creditor can prevent you from seeking the relief and protection of bankruptcy if you find yourself unable to repay your debt, and you don’t need get a court’s permission or give up all your assets.

After you declare bankruptcy, you’ll work on completing some basic duties to receive your official release (discharge) from bankruptcy – this usually happens nine months after the start of your bankruptcy. These duties you’ll have to complete generally include:

  • Completing two private one-on-one financial counselling sessions.
  • Submitting a monthly budget form called a “statement of income and expenses”.
  • Supplying the tax return information for the year you start bankruptcy, as these filings will be done by your Trustee.
  • In most cases you’ll pay a minimum administration fee, usually $2,700 broken into payments throughout your bankruptcy.

Learn Why Most People Keep All their Assets in Bankruptcy

What is the Role of a Licensed Insolvency Trustee in a Bankruptcy? 

You can access bankruptcy services only by working with a local Licensed Insolvency Trustee, and there are some key functions your Licensed Insolvency Trustee will fulfill in a bankruptcy. Your Licensed Insolvency Trustee will:

  • Prepare the legal paperwork you will sign to officially declare bankruptcy and manage the administration requirements throughout the process.
  • Deal with your creditors, including reviewing their claims and managing their inquiries.
  • Issue your official ‘Certificate of Discharge’ and complete the required administration tasks to conclude the bankruptcy.

As with a Consumer Proposal, your Licensed Insolvency Trustee (or Insolvency Estate Manager) is available for ongoing guidance and support throughout your bankruptcy.

Debt Forgiveness with Personal Bankruptcy: Step-by-Step

How Does a Licensed Insolvency Trustee Get Paid for a Consumer Proposal? 

The fees that a Licensed Insolvency Trustee gets for the work they do in a Consumer Proposal (or bankruptcy) are all regulated. Licensed Insolvency Trustees can’t set their own fees, and there is no hourly ‘fee for service’ – there are tariffs set by the federal legislation that are followed in all insolvencies filed in Canada.

To explain it in the simplest terms, in a Consumer Proposal you only pay whatever you are offering your creditors – no fees or interest charges are added on. For example:

  • If your Consumer Proposal offers your creditors $10,800 total, which you will pay by monthly payments of $300 for 36 months – you pay $300 a month for 36 months, that’s it.
  • The Trustee’s payment is calculated based on the amounts you pay and deducted from the funds your creditors get. This all-inclusive payment also covers costs such as: the government filing fee, financial counselling sessions, Personal Property Registry Search charges, and other incidental costs.

Why We Don’t Collect Upfront Payments When You Start a Consumer Proposal

Although all Licensed Insolvency Trustees offer free consultations and must follow the same rules and calculations for their fees, you may find some different approaches as to when you would make your first payment. At Sands & Associates, our approach when it comes to your payments is generally this:

  • You’ll make your first monthly Consumer Proposal payment sometime in the first month after your Consumer Proposal has been officially filed, and then continue with your monthly payments from there. Again, all you pay is your one monthly payment – there are no added fees, hidden costs, or interest charges.

We don’t collect any upfront payments when you are starting your Consumer Proposal because we understand if you are coming to us for help with a debt problem, you would probably benefit from some breathing room before you begin your Consumer Proposal payments. This is just one of the ways our approach is different – we are proud to be ‘debt smart with heart’.

Is a Consumer Proposal Right for Me?

Are There Alternative Debt Help Providers in Canada?

Licensed Insolvency Trustees are Canada’s only official debt help providers – qualified, endorsed, and fully regulated at a federal level. Unofficially, there are individuals and organizations who offer various debt services to Canadians – you may come across debt consultants, debt settlement agents, credit counsellors, and more. These are all unlicensed providers, and they cannot offer you legal protection or solutions that allow you to have debts forgiven in the same way that a Licensed Insolvency Trustee can.

  • Consumers need to be very cautious when it comes to alternative debt help providers and know that if you decide to work with a representative other than a Licensed Insolvency Trustee there can be significant risks in doing so, and often little recourse if you have problems.

Being a Licensed Insolvency Trustee means committing to a high-standard code of ethics and standards of professional practice, with a responsibility to perform all our functions with honesty and integrity. When it comes to debt help, reach out to a Licensed Insolvency Trustee – even if it is for a second opinion.

Our job is to help you solve your debt problems, and we’re here for you without judgment. 

Get confidential advice, explore all your options with a qualified professional – and get a debt-free plan that’s right for you. Book your free consultation with Sands & Associates today.