Options for Dealing with Debts

Bankruptcy should be considered once you have ruled out other, less drastic, measures for solving your financial challenges. For many people, a Consumer Proposal is a better option for both them and their creditors as it allows for a realistic compromise to be worked out whereby a person avoids bankruptcy and debt creditors receive a greater return by agreeing to abide by the terms of the Consumer Proposal. Please review our section on Consumer Proposals for further details.

Other options available to you for consideration include:

  1. Contact your debt creditors: Explain why you cannot make your payments and suggest an arrangement that could work for both of you. You may be surprised that many creditors are willing to cooperate.
  2. Debt Consolidation Loan: You can approach a bank or financial institution about combining or “consolidating” your debts into one loan. This creditor pays off all your debts and, in return, you make monthly payments to that debt creditor. Make sure that you shop around because interest rates vary. Avoid further credit purchases because this could increase your debt load and make the consolidation loan too difficult to handle.
  3. Informal Proposal: In some cases, we can work with you and your creditors to set up a payment plan that allows you to pay your debt creditors in an orderly way, thus helping to preserve your credit rating. This operates similar to a debt consolidation loan, except that you do not borrow the money to pay off your creditors.
  4. Private Debt Counsellors: There are a number of private debt counsellors who will make arrangements with your creditors for you to pay off the indebtedness in full. The counsellor will review your financial situation and arrange a payment program between you and your debt creditors. A fee may be charged by the counsellor in order to perform this service.
  5. Consumer Proposal: Under the Bankruptcy and Insolvency Act, a Trustee files a proposal, which is an arrangement between you and your creditors that allows you to pay off only a portion of your debts, extend the time you have to pay off the debt, or provide some combination of both. To be acceptable, you must offer your creditors more money than what they would expect to receive in a distribution under a bankruptcy.
Are creditors harassing you? Are the endless phone calls and collection letters causing you stress? Are you living on your credit cards? Are you unable to maintain your minimum payments? Are you being pursued for government debt? If you answered "yes" to any of these questions, you are not alone. In the twelve-month period ending July 2016, more than 66,000 Canadians were in the same financial position and found relief by seeing a Licensed Insolvency Trustee and filing personal bankruptcy. Another 57,000 Canadians settled their debt management problems by filing a consumer proposal.

If you are not a resident of British Columbia, more information is available about bankruptcy in Canada.

No matter what the cause of your financial difficulties, the Bankruptcy and Insolvency Act does not restrict a person from filing personal bankruptcy or making a consumer proposal. For example, you could be in financial trouble due to the loss of employment, a divorce, a leaky condo, medical problems, gambling, substance abuse, or poor money management. Regardless of the reason, filing personal bankruptcy or making a consumer proposal to your creditors is based upon your unique individual circumstances and is ultimately your personal decision. In BC, both of these remedies can only be filed by utilizing the services of Licensed Insolvency Trustees. At Sands & Associates, our Licensed Insolvency Trustees understand that most people file into bankruptcy or make a consumer proposal to creditors because of unfortunate circumstances, and we will guide you through this difficult time. 

Personal bankruptcy or a consumer proposal to creditors can provide shelter from the financial storm. Each will stop virtually all legal proceedings, garnishees, and phone calls from your creditors. These legal remedies provide a fresh start by pardoning your debts including credit card debts, lines of credit, legal bills, utility bills, medical bills, automobile insurance, judgments, government debts, etc. A Licensed Insolvency Trustee can help you understand the relative merits of each of these debt management options within BC. 

At Sands & Associates, we make filing personal bankruptcy or making a consumer proposal to creditors simple. We will arrange for a free initial consultation with one of our knowledgeable staff to discuss your financial status, and help you to determine whether bankruptcy or a proposal to creditors is the right choice for you.

Should you choose to file personal bankruptcy or make a consumer proposal to your creditors, we will process the necessary paperwork, arrange for possible meetings with creditors, provide two credit counselling sessions at our convenient offices located in Vancouver, Burnaby, New Westminster, Richmond, Surrey, Langley, Coquitlam, Maple Ridge, White Rock, Abbotsford, Chilliwack, Victoria, Nanaimo, Kamloops and Kelowna. 

After you have filed personal bankruptcy or a consumer proposal, you are required to perform your duties as outlined in the Bankruptcy and Insolvency Act. Some of the duties in a personal bankruptcy include keeping the Licensed Insolvency Trustee informed of your current address, declaring your monthly income and expenses for a minimum of nine months, attending two credit counselling sessions, and paying the Licensed Insolvency Trustee an amount that is dependent upon your income and the assets that you own. 

If this is your first personal bankruptcy, the earliest that you will be eligible for your discharge is nine months after your date of filing. A discharge from bankruptcy means that your debts will be eliminated and your creditors can no longer pursue you for the outstanding amount owed. It provides peace of mind and a chance for a fresh financial start. 

If you choose to make a consumer proposal to your creditors and if the creditors and the court accept it, the contract is binding between you and the creditors. A certificate of completion, which discharges your indebtedness, will be given as long as you meet the terms of the contract and remit the appropriate funds or assets to the Licensed Insolvency Trustee.