How long does a bankruptcy last?

The length of the bankruptcy depends on a few factors – whether you have ‘surplus income’ (see below) and whether you have been bankrupt before. If you have no surplus income and have never been bankrupt before, you will be eligible for an automatic discharge after nine months.

How long does the Consumer Proposal last?

A Consumer Proposal must be completed within 5 years. Usually the payments are monthly (over 60 months), but a Consumer Proposal can also include a lump sum payment, or a combination of the two. If your finances allow, you can pay it off sooner than the agreed-upon payment schedule lays out.

What is a bankruptcy?

A bankruptcy is a legal process to discharge your debts. It is a declaration that your debts are too high for you to repay – and far better than the old concept of a ‘debtor’s prison’! It allows for a fresh start, while giving your creditors some return on what’s owed only if you have a level of income that allows for payments to be made to them, or unprotected assets that can be liquidated (however, most common assets are protected during this process – see below for more information on protected personal assets).

What is a Consumer Proposal?

A Consumer Proposal is an offer to your creditors to pay back a percentage of what you owe them, based on your ability to pay. It is governed by the Bankruptcy and Insolvency Act, administered by a Licensed Insolvency Trustee. Unlike other negotiated debt settlement plans, it is legally binding on all creditors and usually involves paying back less than the total amount of your debt.

What is a Licensed Insolvency Trustee (LIT)?

Licensed Insolvency Trustees (LITs) are federally regulated professionals who provide advice and services to individuals and businesses to reorganize and resolve financial difficulties with expertise and compassion. LITs help individuals or businesses make informed choices to deal with their financial difficulties. They are the only professionals able to administer bankruptcies or proposals.

Debt Management Plan | Consolidation Loans | Campbell Saunders Insolvency Trustee

Living with debt constantly hanging over you can be stressful, overwhelming, and can be holding you back from moving forward with your financial goals. It can also contribute to or worsen physical and mental health problems. Whether you’re self-employed, a student, retired, or working full time, living under the shadow of debt and financial stress has serious effects on your health.

Knowing your options is an important step towards financial recovery and a fresh start, unfettered by your previous debt.

Most people would like to explore non-insolvency options before considering a consumer proposal or a bankruptcy. If you’re unable to overcome your debt simply by adjusting your budget or increasing your income, here is a summary of other options:

Finance companies

often offer debt consolidation plans at very high interest rates. They will sometimes hold personal items as security which can result in the loss of those items if you fall in arrears of the required payments. Review all provisions of these lenders very carefully before you sign any agreements.

Home equity line of credit (HELOC)

If you own real estate and have more equity in your property than the debt you’re trying to deal with, consolidating your unsecured debt by refinancing your mortgage or by applying for a home equity line of credit (HELOC) is an option well worth considering.

A credit card balance transfer

is another option if your main source of debt is a credit card. Many cards have low or zero interest offers for balance transfers (for a specified period of time, i.e. the first three months), which can help you get a head start on paying back the principal debt if you’re able to pay substantial amount during the low/no interest period.