If you are experiencing financial difficulty in Red Deer and have been searching for solutions, chances are you have read you should stay away from a declaration of personal bankruptcy. The Internet is full of debt help websites advising Canadians to consider a Canada bankruptcy only as a last resort.
Consequently, we have people coming into our offices ready for that last resort that really have no idea what Canada bankruptcy laws are and what a bankruptcy filing will mean for them.
When we begin our discussions with them, we point out the Bankruptcy and Insolvency Act of Canada (BIA) actually provides an alternative solution to bankruptcy – a consumer proposal. It is surprising how many residents of Red Deer have never heard of this solution.
As you may know, in a bankruptcy filing you may lose some of what you own. Canada bankruptcy laws recognize that while debtors have a right to get a fresh financial start, creditors also have the right to be repaid as much as each individual debtor can realistically afford to pay.
Low-income filers with minimal assets often lose nothing in a bankruptcy. However, higher income filers will usually have to give up some of what they own to be used to repay their creditors. No one loses everything and each province has exemption allowances that determine what you can keep. You will be happy to learn Alberta has some of the most generous allowances in Canada.
However, depending on your circumstances, you may want to consider a consumer proposal as an alternative to bankruptcy. It is a more costly solution, but you get to keep all your assets if you qualify for a proposal.
Most Red Deer residents have seen or read advertisements from debt settlement companies touting their solution allowing you to cut your unsecured debt in half, without bankruptcy. A consumer proposal does the same thing at a lower cost. More importantly, consumer proposals come with something debt settlement plans do not – legal protection from your creditors.
What those commercials and print advertisements never tell you is creditors are not legally bound to honor their settlement plan. If you sign up for one of those programs, there is no guarantee one or more of your unsecured creditors will not come after you with legal collection activity down the road, even if you are successfully honoring the terms of the plan.
To find out if you qualify for a consumer proposal and how one might help you deal with your financial difficulty in Red Deer, schedule a free initial consultation with a licensed bankruptcy trustee.
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