The difference is that Bankruptcy requires you to surrender your assets to repay your debts. A Proposal, allows an individual to make an agreement with creditors on debt repayment terms. NLDR is here for you to advise on your best interest.
A Consumer Proposal covers your unsecured debts, such as credit card debt, unpaid utility bills, payday loans, and even money owed to the Canada Revenue Agency (CRA). The Proposal is for debts under $250,000 (not including mortgage). If you owe more than $250,000, you may be eligible for a Division 1 Proposal.
NLDR will do it's best to complete the Proposal process dependent on your timeline after meeting a Licensed Insolvency Trustee
The Licensed Insolvency Trustee will layout what the Proposal entails. A Proposal does not usually include the sale and/or disbursement of assets. If you have a home mortgage, you will have to continue making your payments to keep your house. The same goes for your car loans or any secured loans. Secured debts, such as mortgages on homes & car loans, are not covered by the Proposal.
If your mortgage payments are up-to-date, you can prove that you can make mortgage payments in the future, and meet your Lender's requirements, you should be able to qualify for a renewal. Consult with the Licensed Insolvency.
There is no interest costs involved in paying the Proposal over the full term. Whereas, if you take out a loan to pay off the Proposal, you are required to pay interest over time.
The maximum amount of time that Consumer Proposals generally last is 5-years/60-months, however, Proposals can be set up for any number of months. The most common time frames are: 3 years (36 months), 4 years (48 months) and 5 years (60 months). Similarly, you have an option to make a lump sum proposal to your creditors. This is obviously attractive to creditors as they can recoup part of their funds in an expedited time frame. NLDR can provide more guidance once we have assessed your situation. Proposals can prove to be a flexible way for you to settle your debt. NLDR can prepare a Proposal that can meet your budget and financial situation.
If you are behind three (3) months of your payments and do not file an Amendment to your Proposal, your Proposal will be deemed annulled and your Proposal will no longer be a legally binding agreement. Your creditors will be free to take legal action for the full amount of your debt. You may have to file for Bankruptcy if you default on your Proposal.
NLDR will help you review, evaluate, and explain your current financial situation as well as options. NLDR wants you to understand your situation and options so you make the best informed decision possible.
A Bankruptcy is allowed to keep certain assets exempted by the Ontario Execution Act but is required in certain situations to submit all other assets for settlement. A Consumer Proposal, the individual filing the Proposal can keep all their assets. This is provided they continue to make any required payments (i.e. mortgage, car loan)
This is an option pursued when you can’t afford to pay back your debt and need relief. Consult with NLDR for your best options -- many times we can help you avoid Bankruptcy.
It is important to consult with the Trustee and even Mortgage Lender. Depending on the equity in your home, you may be able to pay the value of the equity to your Trustee for distribution to your creditors. As long as you are current with your mortgage payments, you are normally able to maintain the payment to the secured lender and keep your home.
Again, it is important to consult with the Trustee, when you have assets that need to be sold or distributed, the Trustee will handle their disposal. When you have assets that you do not have equity in (that is you owe more on secured loans for these assets than the assets are worth) and your Trustee agrees, you may be able to negotiate with the holders of the secured loans to keep those assets.
Bankruptcies generally take 9 months from filing to discharge. That said, there are a number of factors that can change the length of bankruptcies, including ‘surplus income’, not your first bankruptcy, disputes from your creditors, and/or failure to comply with your duties for a Bankruptcy.
Personal Bankruptcies only cover unsecured debts, certain unsecured debts are not covered by bankruptcies such as child support, alimony, fines and penalties imposed by the Court, and debts that are found to be fraudulent. Student loans may be covered if the individual ceased to be a student for more than 7-years before filing and meets other requirements. Secured debts such as mortgages and car loans are also not covered in bankruptcies unless you relinquish ownership of these assets. It is always advisable to speak with your Trustee for details on your specific situation.
If you are a resident of Canada, owe more than $1,000, over the age of 18-years, and have explored all other debt repayment options, you may be eligible to file for personal bankruptcy. Consult with NLDR for more details.
The main purpose of credit counselling is to provide you with the guidance for you to make better financial decisions and to provide you with the resources and education to absolve yourself of debt. NLDR exists to help you look for your best interest.
Credit Counselling refers to sessions through which a counsellor provides you with financial education to achieve financial wellness. A Consumer Proposal, is a legal process which an individual is able to pay a reduced amount of debt in a set period of time.
Credit Counselling can help you manage your debt, or help you to identify if you require a Consumer Proposal or Bankruptcy to effectively rid yourself of your debt burdens.
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