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Get out of debt — debt problems & possible solutions

Can I borrow money from a financial institution to pay off my debts?

Yes, but it approval will depend on several factors including your income, job stability, and debt level. If you cannot reach the debt ratio required by financial institutions, you cannot consolidate your debt. In that case, we recommend you meet with a Trustee in bankruptcy to discuss other available options.

How can I get rid of my debt?

There are three ways to eliminate debt:

What steps are involved in bankruptcy? When should they be taken?

The steps to bankruptcy are as follows: assessing the situation, signing the documents, and filing documents with the Office of the Superindent of Bankruptcy (OSB), reporting your monthly income, the two follow-up counselling sessions, and discharge.

In terms of time, expect it to take at least nine months for a first time bankruptcy provided you do not have any income exceeding the standard amount deemed to be reasonable by the Government of Canada. If your income exceeds the standard amount deemed to be reasonable by the Government of Canada it may last 21 months.

The process is longer for a second time bankruptcy. It will last 24 months provided you do not have any income exceeding the standard amount deemed to be reasonable by the Government of Canada. If your income exceeds the standard amount deemed to be reasonable by the Government of Canada it may last 36 months.

Is there a minimum amount of debt required to declare bankruptcy?

According to the Bankruptcy and Insolvency Act, people with $1,000 in debts can declare bankruptcy if they are unable to pay their debts on time. In practice, when someone has less than $5,000 in debts other solutions may be considered.

I have a lot of debt and I don't want to declare bankruptcy. Is there another way I can get out of debt?

Yes, there are several ways for people to get out of debt including consumer proposal and debt consolidation. One of our professional team members will explain your options to help you make the best choice for your situation.

Will bankruptcy get rid of all my debts?

Most debts, but not all, are discharged through the bankruptcy process.

Examples of debts not discharged are:

  • secured debts (e.g. mortgage or car loan);

  • child support, maintenance, alimony

  • Court fines, penalties and traffic offences

  • debts obtained by fraud or fraudulent misrepresentation

  • student loans, if less than seven years since leaving university or college

  • civil claims arising from personal or sexual assault

How do I deal with my secured creditors?

A secured creditor is a lender to whom you have pledged one of your assets as collateral to obtain a loan or mortgage. For example, when you purchase a home, it is used as collateral for the mortgage. Or if you obtain a loan, the vehicle you own may be taken as collateral against the loan.

Quite often, when you obtain a loan directly from a company such as CitiFinancial, they will grant the loan but also take collateral on a vehicle, if you have one.

One word of caution: If you decide to retain financed assets and then decide later, after bankruptcy, that you would like to return the asset, the creditor may have to be repaid all amounts due. Finally, no debtor should make arrangements to reaffirm a loan and retain an asset until the secured creditor has filed a claim with the Trustee and the security is proven valid and has confirmed that the Trustee has no interest in the asset. If you are unsure whether a creditor has collateral against your assets you can do a Personal Property Registry search at any Ontario registry office.

Creditors are threatening to seize my property. What should I do?

Feel free to contact a Grant Thornton Trustee for advice.

These answers to frequently asked questions are provided as general information only. Each individual's situation is unique. Call us at 310-6060 for a free, no obligation, confidential consultation.

» Effects of bankruptcy

 

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