Insolvency is a stressful thing to live through and many people who find themselves unable to pay the debts that they owe aren’t entirely sure what to do. When collection agencies are hounding you, creditors are placing garnishes on your wages, and interest rates are quickly spiralling out of control on your credit card, you can become paralyzed by debt. It can affect your home life, your work life, and cause depression. It can also be hard to see a way out of debt when it drains your mental and emotional health.
Bankruptcy in Ontario
The first thing that comes to mind when people think of insolvency is typically bankruptcy. Bankruptcy is one way to settle your debts, but it comes with a lot of disadvantages, including:
- A bad credit score for up to seven years after you file
- Selling property or other non-exempt assets that you own
- Losing an expected inheritance
- Losing the equity in your home (which is now more common than losing your home outright to pay your debts)
Bankruptcy is a last resort when it comes to debt, and Licensed Insolvency Trustees like Toronto’s David Sklar& Associates typically assess a client’s financial situation to find out whether or not they’re eligible for a Consumer Proposal first.
Bankruptcy vs. a Consumer Proposal
When you file for bankruptcy, your non-exempt assets are sold in trust by your Licensed Insolvency Trustee and the proceeds are used to settle your debts. Often, creditors recover only a fraction of what they’ve lent and smaller creditors may be left out entirely. That’s why many are willing to accept a Consumer Proposal in Ontario, an agreement in which the debtor (you) pays off a fraction of their debt over a set schedule. The timeline and amount are determined by your ability to pay it off and a Licensed Insolvency Trustee works with you to find a solution that you can live with and that your creditors will accept. Collection calls stop and interest no longer accumulates on the amount that you owe. If your income increases part-way through the agreement, you can choose to speed up your payments with a new agreement, but it doesn’t have to, even if you experience a financial windfall.
Licensed Insolvency Trustees File Consumer Proposals
An Ontario Consumer Proposal can only be filed by a Licensed Insolvency Trustee, as with bankruptcy. In Toronto and the Greater Toronto Area, firms like David Sklar & Associates help people from all walks of life get out of debt with credit counselling, Consumer Proposals, and filing for bankruptcy. The fee you pay a Licensed Insolvency Trustee is based on the budget you come to for repaying your debt through a Consumer Proposal or Ontario bankruptcy. Everyone can afford to get out of debt with the help of a Licensed Insolvency Trustee. Talk to one in your area for information about Consumer Proposals and relieve the burden of debt. It’s not just a financial weight bringing you down, it’s an emotional one that can seep into all areas of your life. Relief is available, you just have to know where to look.