Frequently Asked Questions about Personal Bankruptcy, Consumer Proposals and Debt Help in BC

We understand that you may have a lot of questions about legal debt solutions and how they work, which is why we’ve put together a basic overview covering topics people frequently ask us about when they’re considering their options to deal with debt.

Read through some commonly asked questions below to learn more about Personal Bankruptcy, Consumer Proposals and Debt Help in BC.

If you don’t find the answer to your specific question, please call our office toll-free at 1-800-661-3030, one of our qualified debt management specialists would be happy to help you.

To meet in person at one of our 16 BC office locations, book your free debt consultation.

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What is bankruptcy?

Bankruptcy is a federally-legislated legal process that eliminates the debt of a person or business, in the event they are unable to repay their financial obligations.

Declaring bankruptcy in British Columbia is done with the help of a debt professional called a Licensed Insolvency Trustee – formerly known as a Bankruptcy Trustee or Trustee in Bankruptcy.

To qualify for bankruptcy, you must be insolvent. To be insolvent means to:
  1. Owe at least $1,000;
  2. Be unable to pay this debt as it becomes due.
Many people mistake being ‘insolvent’ as being bankrupt, but people do not automatically become bankrupt just because they are unable to pay their debts.

Filing for bankruptcy in British Columbia starts with a free consultation with a Licensed Insolvency Trustee. There is no permission required from your creditors – Canadian law gives you the ability to get relief from your debts.

A Licensed Insolvency Trustee will help you evaluate whether filing for personal bankruptcy is the best debt option for your situation.

How do I file for bankruptcy in British Columbia?

There are two ways for a person or business to become bankrupt. The most common is for a person to choose to file for bankruptcy to deal with their unmanageable debt.

Most bankruptcies are considered ‘voluntary’ – which means that the person (or business) unable to pay their debts seeks the services of a Licensed Insolvency Trustee “LIT” (formerly Bankruptcy Trustee) to help with bankruptcy.

In a case where a person chooses a bankruptcy, legal bankruptcy documents would be prepared and signed, which begins the official bankruptcy process. Only a Licensed Insolvency Trustee has the legal authority to help with bankruptcy in British Columbia.

Rarely, a personal or business creditor may petition the court to make an order which then assigns the person or business into bankruptcy.

Your creditors cannot prevent you from filing a bankruptcy.

If you are considering declaring bankruptcy, the first step in the bankruptcy process is to meet with a Licensed Insolvency Trustee for an assessment of your situation.

Book your free debt consultation with a Licensed Insolvency Trustee. We can help you assess whether declaring bankruptcy is the right option for you.

What are the alternatives to bankruptcy?

Many people feel that filing for bankruptcy is the only solution if they need help getting out of debt. However, several debt options in BC exist to help you become debt free.

Usually a person will decide to file for personal bankruptcy only if other debt options are unsuitable.

Some other common options besides personal bankruptcy may include:

  • Trying to work out a repayment, or renegotiated settlement with your creditors on your own.
  • Obtaining a debt consolidation loan through a bank or other traditional lender, which will pay off the individual creditors.
  • Paying a debt or credit counsellor to set up a repayment program with your creditors.
  • Filing a Consumer Proposal to cut your debt by up to 80%, halt interest and stop any collection action. (Consumer Proposals are the number one alternative to filing a personal bankruptcy in Canada).
Meet with a Sands & Associates representative today to discuss the pros and cons of debt solutions available to you.

What debt can be included in a bankruptcy?

Filing a bankruptcy in BC will eliminate virtually all types of debt. Including, but not limited to:

  • Consumer and business debts (credit cards, lines of credit, overdrafts, payday loans, etc.);
  • Income tax debts (income taxes, GST, business taxes, payroll remittances, etc.);
  • Student loans (federal, provincial, private);
  • ICBC debts;
  • Secured debts – should you choose to end the commitment (vehicle shortfall, mortgage foreclosure);
  • Debt for a business for which you have signed a personal guarantee;
  • Debt owing to another person.

Will my creditors stop harassing me if I file for bankruptcy?

Yes, they will! By law, all collection actions against you must cease once official bankruptcy documents are filed.

Filing a personal bankruptcy creates a stay of proceedings, which means that, by law, your creditors will be barred from contacting you for payment, and all collection actions against you must cease once official bankruptcy documents are filed.

Collection calls and letters, wage seizures and bank account freezes are all halted at the beginning of the bankruptcy process.

If you have a mortgage or vehicle loan that you are opting to continue with, these payments will continue.

Watch our short video about how Consumer Proposals in BC impact mortgages and vehicle loans, the same applies in bankruptcy.

Some types of debts (like those to Family Maintenance Enforcement) may not be extinguished by filing a bankruptcy, and the stay of proceedings will not apply.

Who will know if I file for bankruptcy?

Many people considering filing personal bankruptcy are concerned about their privacy. The good news is that the bankruptcy process in BC is actually quite private.

For most personal bankruptcies, only the creditors, the Licensed Insolvency Trustee (Bankruptcy Trustee), the Office of the Superintendent of Bankruptcy (OSB) and the person filing the bankruptcy will be aware of the proceedings.

Credit reporting agencies, also known as credit bureaus, will obtain information about your personal bankruptcy from the OSB and keep this information on your credit history for six years from the date you are discharged from bankruptcy. This is the same amount of time that other transactions the credit bureaus consider “negative” will be reflected (ie. late payment history, collection accounts.) This does not mean that you cannot obtain credit during this time.

During your bankruptcy, one-on-one financial counselling sessions will provide you with tools and resources to help you re-establish your credit rating after bankruptcy.

Watch our short video: Who Will Know About Personal Bankruptcy

What am I allowed to keep if I file for personal bankruptcy?

Most people who file for personal bankruptcy keep all their assets.

Provincial laws set out property that you are automatically entitled to keep in the event you file for personal bankruptcy.

Read More: What am I allowed to keep if I file for personal bankruptcy?

What is a Consumer Proposal?

A Consumer Proposal is a legal agreement that allows a person to consolidate all of their debts into a single amount, stop all future interest charges and collection activities, and repay a portion of the debt (often 20-40%) in full satisfaction of amounts owing.

For example, an individual owing $20,000 might offer a Consumer Proposal to repay 30% of this total amount at monthly payments of $166.67 for 36 months. The balance of the debt (ie. 70% of the total debt) is written off at the conclusion of the Consumer Proposal.

A Consumer Proposal is not the same as filing a bankruptcy. Although both are legal debt solutions only available through a Licensed Insolvency Trustee (formerly bankruptcy trustees), they are two entirely different processes.

Compare the main differences between Consumer Proposals and Bankruptcy.

Only a Licensed Insolvency Trustee can help you file a Consumer Proposal, and no referral is required.

Ready to get started? Book a free, confidential debt consultation today!

Can I keep making payments on my car or mortgage if I file for bankruptcy?

If you have a vehicle financing agreement (lease or loan), or a mortgage, you can choose to continue with those agreements while you are in bankruptcy.

Conversely, you may decide not to continue those agreements and ultimately include any balances owing in the bankruptcy.

Read More: Can I keep making payments on my car or mortgage if I file for bankruptcy?

Who can file a Consumer Proposal?

A Consumer Proposal can be filed in BC by a person who owes between $1,000 and $250,000 (not including mortgages on their personal residence).

If a person owes more than $250,000 they may still be able to file a Proposal, but some different rules will apply.

A joint Consumer Proposal may also be filed by two or more individuals together (ie. couples, business partners).

To file a Consumer Proposal, you must engage the services of a Licensed Insolvency Trustee – they are the only professionals who are legally authorized to file a Consumer Proposal for you. An individual is not able to file a Consumer Proposal without the assistance of a Licensed Insolvency Trustee.

Watch a 1-minute overview of Consumer Proposals or use our Debt Options Calculator to get a general comparison of four key debt options.

Can I keep my RRSPs if I file for personal bankruptcy in BC?

You are entitled to keep your RRSPs if you file a personal bankruptcy in BC, except for amounts contributed in the 12 months prior to your date of bankruptcy.

The Bankruptcy and Insolvency Act provides protection for RRSPs of an unlimited value (except for contributions made in the 12 months prior to bankruptcy) in event that you file a personal bankruptcy.

It is important to note that a transfer between RRSP funds is not the same as an RRSP contribution. Transferring funds from one RRSP to another company is not considered a new contribution.

If you’re considering cashing in RRSPs to pay debts – call us before you take action. RRSP funds lose their protected status once withdrawn and often trigger large tax liabilities for the year in which funds are withdrawn.

Watch our short video: What about RRSPs?

How can I find out who I owe money to?

If you’re unsure who you may owe money to, a good place to start is by requesting copies of your credit history reports from both Equifax Canada and TransUnion. These can be obtained online, for a fee; or by mail, at no cost.

Read More: How can I find out who I owe money to?

What are the benefits of filing a Consumer Proposal?

Filing a Consumer Proposal to consolidate and settle debts in BC can have many benefits and advantages over other debt solutions.

Some general benefits of filing a Consumer Proposal include being able to:
  • Consolidate debt
  • Reduce amount of debt that needs to be repaid (in full settlement)
    Debt can often be cut by up to 80%
  • Stop interest and collections
    By law all interest will stop, and creditors must refrain from contacting you for payment
  • Have a definite date of being “debt-free”
    Consumer Proposal can last no more than 60 months and can be paid off early without penalty
  • Deal with virtually all types of debts
    Even government debts like taxes, student loans, WCB, MSP, etc.
  • Protect assets from creditors
    Collection and legal action cease upon filing the Consumer Proposal
  • Avoid filing bankruptcy.
Watch our short video: What are the benefits of filing a Consumer Proposal?

How much does it cost to file for bankruptcy in British Columbia?

In a basic bankruptcy the cost is approximately $1,800 total. Sands & Associates offers payment plans that allow a person to make monthly payments over time.

Most people will pay $200 per month for the nine-month term of their personal bankruptcy.

Consultations to discuss your situation and evaluate all your possible debt options are always free, and no referral is required to meet with a Licensed Insolvency Trustee.

All Licensed Insolvency Trustee fees are set by government tariff and are regulated by Industry Canada.

How can I get my credit report?

There are two main credit bureaus in Canada, Equifax and TransUnion. It is usually a good idea to check both, as one may have different information than the other.

While you can order and quickly receive your credit history reports and score through agency websites, there will be fees charged for this service.

To get free copies, you can request to receive your credit history reports by mail. Credit History Request Forms for both Equifax and TransUnion are available here in our Client Resources section.

What are the main steps in a Consumer Proposal?

There are four main steps to filing a Consumer Proposal in BC.

1. The first step is to book a free, confidential debt consultation.
Request a consultation with Sands & Associates here! Or call us toll-free: 1-800-661-3030.
2. If you decide to file a Consumer Proposal, the next step will be to sign the official documents, which will then be officially registered and sent to your creditors.
3. Complete the terms of your Consumer Proposal. (These are usually monthly payments, along with two financial counselling sessions).
4. After your last payment, your Consumer Proposal will be finished! You are now debt-free and have achieved a financial fresh start!

Read More: What are the main steps in a Consumer Proposal?

Can tax debt be included in a bankruptcy in Canada?

If you owe money to Canada Revenue Agency (Revenue Canada) for income taxes, GST, or employee remittances, these debts can be eliminated by filing a bankruptcy in BC. Filing a bankruptcy or a Consumer Proposal are the ONLY options for eliminating or negotiating debt to Canada Revenue Agency (Revenue Canada).

Bankruptcy will also stop further collection actions such as a wage seizure or bank account freeze.

In the event Canada Revenue Agency has registered as a secured creditor against your real property (real estate) or your personal property (furniture, vehicle, etc.), we can review with you in detail the rights and remedies of Revenue Canada in your specific situation.

Meet with a Licensed Insolvency Trustee today to learn more about options to deal with tax debt.

Can Canada Revenue Agency put a lien on my house?

If you are behind in your tax filings or payment obligations, CRA may resort to collection actions including placing a lien on your residence, or other real property.

Filing a personal bankruptcy, or a Consumer Proposal can halt escalating collection actions.

Read More: Can Canada Revenue Agency put a lien on my house?

Can I go bankrupt on student loans?

Yes - student loans can be wiped out by filing a personal bankruptcy in BC, whether they are private, provincial or federal. Filing a bankruptcy, or a Consumer Proposal are the ONLY options for eliminating or negotiating government student loan debts.

A wage garnishment or bank account freeze imposed by Revenue Canada for student loan debt would be lifted by filing a bankruptcy.

If it has been seven years or more since you last attended school, the student loans will be fully discharged (released) under your bankruptcy.

If it has been less than seven years since you finished your studies, your student loans survive the bankruptcy filing and need to be repaid after the bankruptcy is completed.

If it has been less than seven years, but more than five years since the end of your studies and you are having difficulty repaying your student loan, a Court can order the discharge of your student loans following your bankruptcy.

Watch our short video: What about Student Loans?

Can Canada Revenue Agency seize my wages or freeze my bank account?

If you are behind in your tax filings or payment obligations, CRA may resort to freezing your bank accounts, or even garnishing your wages or self-employment income.

While most creditors require a successful court application to begin seizing your wages, or self-employment earnings, Canada Revenue Agency (CRA) is a powerful creditor who can access avenues of debt collection much more quickly than other types of creditors. You may not learn of a pending wage garnishment, or bank account seizure until it is already in place.

Filing a personal bankruptcy, or a Consumer Proposal can halt escalating collection actions. Wage seizures or bank account freezes imposed by CRA will be lifted upon filing a bankruptcy or Consumer Proposal.

Book a free debt consultation with Sands & Associates today to find out more.

What debts can I include in a Consumer Proposal?

Filing a Consumer Proposal in BC will wipe out nearly all types of debt. Including, but not limited to:

  • Consumer and business debt (credit cards, lines of credit, overdrafts, payday loans, etc.);
  • Income tax debts (income taxes, GST, business taxes, payroll remittances, etc.);
    • Aside from bankruptcy, a Consumer Proposal is the only settlement mechanism available in Canada that will reduce and eliminate government debts
  • Student loans (federal, provincial, private);
  • ICBC debt;
  • Secured debts – should you choose to end the commitment (vehicle shortfall, mortgage foreclosure). If you continue to make monthly secured debt payments, a Consumer Proposal does not normally require you to surrender secured assets
  • Debt for a business for which you have signed a personal guarantee;
  • Debt owing to another person.

Will my creditors stop contacting me if I file a Consumer Proposal?

Yes, they will! By law, collection action against you must cease once your Consumer Proposal has been filed.

A Consumer Proposal provides a stay of proceedings, which means that, by law, your creditors can no longer contact you for payment. All collection actions against you must cease once official Consumer Proposal documents are filed. Consumer Proposals trigger a “freeze” on your debts and stop interest charges, collection calls and letters, wage seizures and bank account freezes.

If you have a mortgage or vehicle loan that you are opting to continue with, these payments or contact from your creditors about these accounts will continue.

Watch our short video about how Consumer Proposals in BC impact mortgages and vehicle loans.

Some types of debts (like those to Family Maintenance Enforcement for child and/or spousal support) may not be extinguished by filing a Consumer Proposal, and the stay of proceedings will not apply.

What debts survive bankruptcy?

While most debts will be discharged (wiped out) by filing a personal bankruptcy in BC, some types of debts may survive.

They are:
  • Child and/or spousal support payments;
  • Fines imposed by a court;
  • Money owing for things stolen;
  • Property or services obtained through false pretenses or fraudulent misrepresentation;
  • Award of damages by a court for intentionally inflicting bodily harm or sexual assault;
  • Student loans if bankruptcy is filed within seven years after the end of studies.
Debts that will survive your bankruptcy will be discussed with you during the debt consultation process.

Watch our short video: What about Student Loans?

Is there a statute of limitation on debt in BC?

In British Columbia, the Limitation Act sets various limitation periods, including capping the length of time people have to sue for a debt owing. This does not prevent creditors from calling you, sending you correspondence, or negatively impacting your credit score.

With regards to basic consumer debt, BC has a two-year basic liability limitation period.

Read More: Is there a statute of limitation on debt in BC?

What do I have to do during the bankruptcy process?

To be discharged (released) from bankruptcy, you will need to complete some duties as part of your bankruptcy. These are set out in the Bankruptcy and Insolvency Act and will be discussed with you in further detail before you commit to the official process.

The duties generally required are:
  • Attend two financial counselling sessions, held one-on-one at the office of your Licensed Insolvency Trustee
  • Submit a monthly “Statement of Income and Expenses”, to report your household income and living expenses
  • Remit any surplus income required, based on calculations of your household income and the Superintendent’s income standard
  • Provide the information required for the Trustee to file your income tax returns
  • Keep the Trustee informed of your current address
  • Attend a meeting of creditors (if called)

Who will know if I file a Consumer Proposal?

Consumer Proposals are generally quite private. When you file a Consumer Proposal, your Licensed Insolvency Trustee will generally only notify your creditors and the Superintendent of Bankruptcy “OSB” (the government body that oversees all Consumer Proposals) that you have made a Consumer Proposal.

Credit reporting agencies, also known as credit bureaus, will obtain information about your Consumer Proposal from the OSB and keep this information on your credit history for three years from the date your Consumer Proposal is complete. This does not mean that you cannot obtain credit during this time.

Three years after completion is the same amount of time that traditional and non-profit credit counselling programs will be reflected on your credit history; it is also less time than a personal bankruptcy filing, or transactions the credit bureaus consider “negative” will be reflected (ie. late payment history, collection accounts.)

The two financial counselling sessions provided during the Consumer Proposal process will provide you with tools and resources to help you re-establish your credit rating following your Consumer Proposal.

Watch our short video: Will my employer know if I file a Consumer Proposal?

What is a Licensed Insolvency Trustee ("LIT")?

In 2017, the professional title for Trustees in Bankruptcy (sometimes referred to as Bankruptcy or Insolvency Trustees) changed to Licensed Insolvency Trustees (LITs for short).

Licensed Insolvency Trustees are the only professionals in Canada that are legally empowered to help Canadians eliminate their debts using legal debt options like Consumer Proposals and bankruptcy.

This legal standing allows LITs to administer superior debt management solutions which have the legal authority to halt and extinguish virtually all debts, including government debts.

No referral is required to meet with a Licensed Insolvency Trustee, and debt consultations are free of charge.

What is the Office of the Superintendent of Bankruptcy?

The Office of the Superintendent of Bankruptcy (OSB) is the government body which oversees all matters and filings that the Bankruptcy and Insolvency Act applies to, including bankruptcies and Consumer Proposals.

Licensed Insolvency Trustees obtain their licensing from the OSB, who also regulates insolvency professionals, and supervises the administration of insolvency estates (Consumer Proposals and bankruptcies).

The OSB’s position ensures transparency and dispute-resolution mechanisms throughout the entire insolvency process and provides consumer assurance that professional conduct is followed.

Find a local BC Licensed Insolvency Trustee.

How do I get discharged from bankruptcy?

Being discharged from bankruptcy means that you exit bankruptcy, free of debt. In most bankruptcy cases, you will be granted an automatic discharge from bankruptcy nine months after the date your bankruptcy starts, provided that the duties required have been successfully completed.

In the event you have filed a bankruptcy before, this nine-month term is extended to 24 months before you are eligible to receive an automatic discharge (release) from bankruptcy.

Read More: How do I get discharged from bankruptcy?

Can I keep making my payments on my car or mortgage if I make a Consumer Proposal?

If you have a vehicle financing agreement (lease or loan), or a mortgage, you can choose to continue with those arrangements outside of your Consumer Proposal. Most people will use a Consumer Proposal to deal only with debts other than those involving an ongoing car or mortgage agreement.

When you have a mortgage or vehicle financing the lender holds an asset as collateral (ie. your home, in a mortgage). This means that they are “secured creditors” and treated a bit differently than other creditors (ie. credit card debt) in a Consumer Proposal.

You can decide to continue with payment arrangements to secured creditors, if you want to keep the asset pledged as collateral.

You also have the option of surrendering the asset to the secured creditor, ending any ongoing payment obligation. If there is a shortfall (difference between what you owe and what the asset is re-sold for), this can also be absorbed by the Consumer Proposal.

Watch our short video: Can I keep making my payments on my car or mortgage?

Where can I get debt help if I have bad credit?

A Licensed Insolvency Trustee can offer debt help in BC regardless of a positive or negative credit score. Some people we assist have “ideal” credit ratings, while others are struggling to find help with bad credit.

Many people looking for debt consolidation help find that traditional avenues, like debt consolidation loans through a bank are unavailable to them because their finances are already stretched thin, or because a poor credit history makes them ineligible to lenders.

It is possible for a Licensed Insolvency Trustee to help you with debt consolidation if you have “bad” credit (or “good” credit). This is often achieved through filing a Consumer Proposal, which legally consolidates and eliminates debt.

Get started with a free debt consultation in one of our local BC offices today!

What can I keep if I file a Consumer Proposal?

Under a Consumer Proposal you retain possession of all of your assets – there is no “vesting” of your assets in the Trustee.

Consumer Proposals will commonly offer creditors settlement of debts by way of monthly payments, not by way of surrendering assets. This means that individuals keep all their assets when they file a Consumer Proposal.

Because filing a Consumer Proposal ensures that creditors can no longer pursue you for payment, or continue collection action, a Consumer Proposal can be an effective tool in protecting assets from creditor seizure or attachment.

Watch our short video: What Happens to my Assets?

What happens to my income during bankruptcy?

After you have filed for bankruptcy your earnings, including wages, commissions, salaries, self-employed income, etc. all continue to go directly to you throughout your bankruptcy.

Wage garnishments previously put in place by creditors collecting on debts included in your bankruptcy will also stop once you have filed bankruptcy.

There is no cap or maximum amount of income you can earn during your bankruptcy. However, if it is expected that you will have substantial surplus income, a Consumer Proposal may be a more suitable option than filing a personal bankruptcy.

Watch our short video: What Happens to my Wages during Bankruptcy?

Can Revenue Canada debt be included in a Consumer Proposal?

Consumer Proposals can include all debts to Canada Revenue Agency (formerly Canada Customs and Revenue Agency, Revenue Canada) including debt for personal income tax, GST, payroll remittances or corporate tax.

Consumer Proposals are the ONLY mechanism in Canada that can be used to settle government debts for less than the full amount owing, besides bankruptcy.

Filing a Consumer Proposal will also stop further interest from accumulating, and halt bank account freezes and wage seizures that Canada Revenue Agency may have in place.

After you file a Consumer Proposal, you will need to ensure that your tax filing obligations are kept up to date throughout the proposal.

Watch our short video: Can income tax and GST debt be included in a Consumer Proposal?

What is surplus income in bankruptcy?

Surplus income is a calculation used to determine:

• How long a person’s bankruptcy will last; and
• How much a person in bankruptcy needs to pay each month.

Surplus income is the amount that your net income exceeds the Superintendent’s Monthly Income Standards.

Read More: What is surplus income in bankruptcy?

What is financial counselling?

As part of the bankruptcy process, you will need to attend two financial counselling sessions.

These one-on-one sessions are typically held at the office of your Licensed Insolvency Trustee, and the cost for each is already included in the bankruptcy payments.

The first counselling session is usually held within one to two months after the start of your bankruptcy and covers general money management, goal-setting, spending habits, and household budgeting tools.

The second financial counselling session is generally held around six months after the start of your bankruptcy and provides the guidance and tools required to successfully rebuild your credit after the bankruptcy is discharged.

The Bankruptcy and Insolvency Act requires counsellors to be registered Insolvency Counsellors, who have successfully completed a specialized accreditation program and demonstrated significant experience.

Watch: How are clients changed by financial counselling?

Can student loans be included in a Consumer Proposal?

Yes - a Consumer Proposal can be used to reduce student loans, whether they are owed to Canada Student Loans, BC Student Loans (or another province), or owed to a private lender. A Consumer Proposal is the ONLY option to reduce government and private student loans, besides bankruptcy.

A wage garnishment or bank account freeze imposed by Canada Revenue Agency for student loan debt would be lifted by filing a Consumer Proposal.

If it has been seven years or more since you last attended school, the student loans will be fully discharged (settled) by the Consumer Proposal.

If it has been less than seven years since you finished your studies, your student loans survive the Consumer Proposal, and the remaining balance less any amounts paid as part of the Consumer Proposal needs to be repaid after the Consumer Proposal is completed.

Many people with recent student loans find that once their other debts have been settled under a Consumer Proposal, the remaining student loan balances are then manageable.

What debts are not included in a Consumer Proposal?

While most debts will be settled in full by filing a Consumer Proposal in BC, some types of debts may survive.

They are:

  • Child and/or spousal support payments;
  • Fines imposed by a court;
  • Money owing for things stolen;
  • Property or services obtained through false pretences or fraudulent misrepresentation;
  • Award of damages by a court for intentionally inflicting bodily harm or sexual assault;
  • Student loans if the Consumer Proposal is filed within seven years after the end of studies.
Some of these creditors are entitled to file a claim in the Consumer Proposal (spousal or child support, EI overpayments, student loans) which would result in funds being paid to them. The person making the Consumer Proposal will then be responsible for paying the surviving balances due, less any payments received by those creditors through the Consumer Proposal.

Debts that will survive your Consumer Proposal will be discussed with you during the debt consultation process.

What happens to my tax returns during bankruptcy?

The year you file for bankruptcy will be split into two tax returns: a pre-bankruptcy tax return and a post-bankruptcy tax return.

These returns will be filed by your Licensed Insolvency Trustee, using information you provide (ie. T4s, etc.).

Read More: What happens to my tax returns during bankruptcy?

How much does it cost to file a Consumer Proposal in British Columbia?

Most people will just make a first monthly proposal payment at the time they sign their official documents – no extra payments are required to start a Consumer Proposal. The Licensed Insolvency Trustee’s fees in a Consumer Proposal are set by government tariff.

These fees are deducted from the funds the creditors receive and there is no additional cost to the person above what they are offering to their creditors in the Consumer Proposal.

Read More: How much does it cost to file a Consumer Proposal in British Columbia?

How long will a bankruptcy show on my credit report?

A personal bankruptcy will be reflected on a person’s credit history for six years following the person’s discharge (release) from bankruptcy.

This does not prevent you from seeking new credit before the bankruptcy expires from your credit history report.

Read More: How long will a bankruptcy show on my credit report?

Can I file for bankruptcy if I have been bankrupt before?

It is possible to file for bankruptcy more than once, provided you were discharged (released) from your previous bankruptcy.

Read More: Can I file for bankruptcy if I have been bankrupt before?

How long will a Consumer Proposal show on my credit history?

A Consumer Proposal will be reflected on a person’s credit history for two to three years following completion of the Consumer Proposal.

This is the same credit rating impact as traditional or non-profit credit counselling programs.

This does not prevent you from seeking new credit before the Consumer Proposal expires from your credit history report.

Read More: How long will a Consumer Proposal show on my credit history?

What happens if my Consumer Proposal is rejected?

Consumer Proposals are almost always accepted by creditors.

In the rare event a Consumer Proposal is rejected by creditors, it may be because the creditor wishes to negotiate some term of the proposal (payment amount or length). In that case, you have the option to adjust the proposal terms offered or allow the proposal to be voted down.

If the creditors do not accept the Consumer Proposal and it is ultimately rejected, the creditors will then be able to continue to pursue you for payment of the debts owing. You may want to consider whether filing a personal bankruptcy is appropriate to deal with your debt and discuss this option with your Licensed Insolvency Trustee.

Watch our short video: What happens if my Consumer Proposal is rejected?

What if my situation changes and I can't finish my Consumer Proposal?

If your situation changes and you can't manage your Consumer Proposal payment, it may be possible for your Licensed Insolvency Trustee to modify your debt settlement terms by filing an amended Consumer Proposal.

In this situation, your creditors would be advised of your intention to change your Consumer Proposal terms, and they must agree to accept the amended Consumer Proposal. As with the original proposal, if the majority of creditors (by dollar value) vote in favour, the new proposal terms will take effect.

In rare cases, an adverse change in circumstance may lead a person who has filed the Consumer Proposal to abandon it altogether and file a personal bankruptcy. While a Consumer Proposal is an alternative to personal bankruptcy, it does not take away the option to file a bankruptcy if the circumstances warrant it.

If you have an ongoing Consumer Proposal and feel your situation is making it challenging to fulfill, speak with your Licensed Insolvency Trustee or Estate Manager as soon as possible. We will work with you to find an alternative solution.

Can I make a Consumer Proposal if I’ve filed bankruptcy before?

It is possible to make a Consumer Proposal if you have previously filed a bankruptcy.

If an individual is currently in bankruptcy, and their financial circumstances have changed for the better, that person can file a Consumer Proposal. The bankruptcy will be annulled on acceptance of the Consumer Proposal by the creditors and approval by the Court.