We deal with many people who have first attempted a Credit Counselling debt management plan and have been unsuccessful.  As outlined in the Consumer Proposals section of our website, there are significant advantages in filing a Consumer Proposal as an alternative to pursuing credit counselling.

The decision to file for personal bankruptcy should be taken only after considering all options. The chart below compares and contrasts credit counselling and personal bankruptcy in BC:

Personal Bankruptcy
VS. Credit Counselling

Quite often we see individuals at Sands & Associates who, despite their best intentions to repay all of their debts in full, are unable to do so without the assistance of a debt restructuring professional. If you’re considering a debt management plan and feel that either traditional credit counselling or a bankruptcy may be right for you, take a look at some of the key points distinguishing the two:
Personal Bankruptcy
Credit Counselling
How Much Debt Repaid

No set repayment of debts

For nearly 80% of bankruptcies no amounts are repaid to the creditors and monthly payments are normally for administration costs only

Generally required to repay 100% of the debt

Interest frozen by negotiation. Some creditors will not agree to an interest freeze. Tax debts and student loans will continue to charge interest

Amount of Monthly Payment

Payments are based on your income and assets that are not exempt

Minimum monthly payment is usually $200 per month for 9 months

No set guidelines on proportion of income repayment would require

Typically high payment terms because 100% of debt is being repaid

Administration Costs

Monthly payments are set by government tariff with income levels and family size taken into account

Licensed Insolvency Trustee fees are regulated by the federal government

Monthly monitoring and consultation fees, other levies may be charged in addition to monthly debt repayment

Chargeable fees are unregulated

Impact on Credit Rating

An R9 rating will be noted for six years following discharge; it is still possible to obtain credit during this period

A reasonable goal to rebuild your credit would be two to three years after your discharge

Tools such as a secured credit card, GIC loans, RRSP loans, etc may be immediately available to you following your discharge

An R7 rating will be noted for two to three years after completion

Length of Time

Bankruptcy will last for either 9 or 21 months if it is a first-time bankruptcy, depending on income levels

Depends on size of debt and repayment. 5 year terms are common.

Creditor Agreement and Collections

No creditor can prevent you from filing for personal bankruptcy

All debts owing to Canada Revenue Agency (including interest and penalties) can be extinguished in a personal bankruptcy

Only a Licensed Insolvency Trustee can cease a wage garnishment, asset seizure and other collection action

Contact from creditors must cease upon filing

100% agreement by each creditor required, otherwise they must continue to be paid separately

No ability to settle income tax debt for less than 100% of balance owing

No ability to force wage seizures or other collection actions to stop

Creditors in agreement with the plan will typically refrain from contact while the plan is in good standing, but there is no legal authority to enforce this

Advisor’s Qualifications

Licensed Insolvency Trustees are licensed by the federal government

Overseen by the Office of the Superintendent of Bankruptcy

Must comply with Code of Ethics and rules of professional conduct

No set qualifications required to operate as a Credit Counsellor

No regulatory body

No dispute-resolution mechanism in place



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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.