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Difference between revisions of "Dealing with Debt (10:V)"
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=== 1. Consumer Proposal === | === 1. Consumer Proposal === | ||
Depending on the nature and amount of the debt(s) and the consumer’s ability to pay, a consumer proposal should be considered. Creditors may recover more money in consumer proposals than in bankruptcy. However, there are windfalls that arise in bankruptcies that can result in unexpected recoveries. A consumer proposal is a legal arrangement with creditors to repay a portion of the amounts owing. Assets are not usually jeopardized (as they may be in bankruptcy) and the interest stops accruing as long as payments are being made. Legal action is not effective while the consumer proposal arrangement is in place. | Depending on the nature and amount of the debt(s) and the consumer’s ability to pay, a consumer proposal should be considered. Creditors may recover more money in consumer proposals than in bankruptcy. However, there are windfalls that arise in bankruptcies that can result in unexpected recoveries. A consumer proposal is a legal arrangement with creditors to repay a portion of the amounts owing (BIA s 66.11). Assets are not usually jeopardized (as they may be in bankruptcy) and the interest stops accruing as long as payments are being made. Legal action is not effective while the consumer proposal arrangement is in place (s 69.1(1)). Where secured creditors vote for the refusal of consumer proposal, the creditor may proceed with their recovery as they otherwise would be entitled to (s 69(6)). | ||
Filing a consumer proposal is not free. If the CP is accepted by the creditors, the first $1,500 is paid to the trustee. The first $1,500 is deducted before calculating the distribution to creditors. Consumers are also expected to pay the administrator 20% of the moneys distributed to creditors under the consumer proposal. There may also be more fees [''Bankruptcy and Insolvency General Rules,'' CRC, c 368, s 129(1)]. Please consult a Trustee for more detailed information. '''For more information on consumer proposals, refer to the Office of the Superintendent of Bankruptcy in Canada's description of consumer proposals at''' | Filing a consumer proposal is not free. If the CP is accepted by the creditors, the first $1,500 is paid to the trustee. The first $1,500 is deducted before calculating the distribution to creditors. Consumers are also expected to pay the administrator 20% of the moneys distributed to creditors under the consumer proposal. There may also be more fees [''Bankruptcy and Insolvency General Rules,'' CRC, c 368, s 129(1)]. Please consult a Trustee for more detailed information. '''For more information on consumer proposals, refer to the Office of the Superintendent of Bankruptcy in Canada's description of consumer proposals at''' | ||
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All RRSPs and RRIFs are exempt from seizure in a bankruptcy (except for contributions made in the year preceding bankruptcy). | All RRSPs and RRIFs are exempt from seizure in a bankruptcy (except for contributions made in the year preceding bankruptcy). | ||
Any material transaction made within the past | Any material transaction made within the past 12 months is reviewable. If a preference was given to a creditor, the trustee may act on the transaction. Lastly, any tax refund for the year of bankruptcy or any prior year becomes part of the bankruptcy, and will go to a trustee for the benefit of the creditors., or it may be seized by the government to fulfil a government debt. | ||
:'''NOTE:''' If the debtor (except anyone in commercial activities (self-employed or business) or in jail) chooses a trustee and is rejected (due to a fee charge) because they are unable to pay, they should contact the Office of the Superintendent of Bankruptcy (“OSB”), and ask to participate in the Bankruptcy Assistance Program. The debtor must obtain a written refusal from 2 trustees and, if they qualify for the program, will then be assigned a trustee in the referral program for a reduced fee (not for free). This program is not available to everyone that cannot afford to pay. Further, it does not exclude non-exempt assets such as GST and income tax refunds from seizure. Information can be found at the [http://www.servicecanada.gc.ca/eng/goc/bankruptcy_assistance.shtml Bankruptcy Assistance Program website] or by calling the OSB’s national number at 1-877-376-9902. | :'''NOTE:''' If the debtor (except anyone in commercial activities (self-employed or business) or in jail) chooses a trustee and is rejected (due to a fee charge) because they are unable to pay, they should contact the Office of the Superintendent of Bankruptcy (“OSB”), and ask to participate in the Bankruptcy Assistance Program. The debtor must obtain a written refusal from 2 trustees and, if they qualify for the program, will then be assigned a trustee in the referral program for a reduced fee (not for free). This program is not available to everyone that cannot afford to pay. Further, it does not exclude non-exempt assets such as GST and income tax refunds from seizure. Information can be found at the [http://www.servicecanada.gc.ca/eng/goc/bankruptcy_assistance.shtml Bankruptcy Assistance Program website] or by calling the OSB’s national number at 1-877-376-9902. | ||
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== I. Student Loan Debt == | == I. Student Loan Debt == | ||
The law surrounding student loans and grants is constantly changing, and varies greatly between provincial jurisdictions. Students should visit the federal and provincial student loan websites to get up to date information about repayment assistance. The information found below is up to date as of | The law surrounding student loans and grants is constantly changing, and varies greatly between provincial jurisdictions. Students should visit the federal and provincial student loan websites to get up to date information about repayment assistance. The information found below is up to date as of June of 2021. | ||
=== 1. Federal Student Loan Debt === | === 1. Federal Student Loan Debt === | ||
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For further information on getting repayment assistance for Federal student loans, see http://www.canlearn.ca/eng/loans_grants/repayment/help/index.shtml. | For further information on getting repayment assistance for Federal student loans, see http://www.canlearn.ca/eng/loans_grants/repayment/help/index.shtml. | ||
:'''NOTE:''' Due to COVID-19, effective | :'''NOTE:''' Due to COVID-19, effective April 2021, the Government of Canada has suspended the accumulation of interest on Canada Student Loans until March 31, 2022. Subject to Parliament approval, the Government of Canada has proposed to extend this measure until March 31, 2023. | ||
=== 2. Provincial Student Loan Debt === | === 2. Provincial Student Loan Debt === | ||