Answering 3 of the Most Common Bankruptcy QuestionsMay 03, 2017
The downturn in the oil sector last year had a significant impact on families throughout Saskatchewan, with the consumer insolvency rate increasing by 38.4 per cent. The impact of debt can be stressful, but you do have options when it comes to seeking debt help. Bankruptcy or a consumer proposal are two debt options available to assist you in resolving debt problems. You might have heard many myths surrounding bankruptcy, so here are three answers to some of the frequently asked questions about bankruptcy:
- Do I file for bankruptcy myself or does someone do it on my behalf?
In order to file for bankruptcy, or a consumer proposal, you will need to use the services of a Licensed Insolvency Trustee (LIT). These professionals are licensed by the Office of the Superintendent of Bankruptcy Canada to negotiate with creditors on your behalf. If you are considering filing for bankruptcy, an LIT will listen carefully as you describe your situation and explain every debt relief option available to you. It is possible that you will be able to find an alternative to bankruptcy, including a consumer proposal.
- What’s the difference between a consumer proposal and bankruptcy?
The two options are similar, but there are some key differences in how it resolves your debt problems. When you file for bankruptcy, you will be absolved of unsecured debt, whereas with a consumer proposal you will still need to pay back a portion of your total debt load. A consumer proposal will allow you to make one fixed monthly payment toward your remaining debt, but your monthly bankruptcy payments may change based on your income that month. The time period for a consumer proposal to be removed from your credit report after a successful discharge is also shorter than if you were to file for bankruptcy, however, the consumer proposal process typically takes longer. Learn more about a consumer proposal and the bankruptcy process.
- Will I lose all of my assets?
In each province, certain assets are protected when filing for bankruptcy, but Saskatchewan allows you to keep more of your assets than most other provinces. In any case, you will not lose everything, but you may have to give up some assets to help with debt repayment. An LIT will be able to answer all of your questions regarding what assets are protected in a bankruptcy filing. On the other hand, if you are able to pay back a portion of your debt with a consumer proposal, this alternative to bankruptcy allows you to keep all of your assets.
For more answers to commonly asked debt questions, join the conversation on Twitter using #LetsTalkDebt.