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If you live in Surrey, British Columbia and are thinking about filing for personal bankruptcy, it is wise to first consider some of the bankruptcy alternatives. Bankruptcy should be your last resort.
Generally people prefer consumer proposals over bankruptcy because they allow debtors to pay their creditors back over a prolonged period of time. Proposals are best suited to those who have at least $500 in debt.
Consumer proposals offer a number of advantages including:
- A maximum period of five years
- Frozen interest from the date of filing
- Possible negotiations to only pay back a fraction of the debt
- Creditors are “stayed” from pursuing legal action
- Wage garnishments stop.
Your trustee will begin by helping you calculate how much you can afford to pay back each month by examining your monthly income and expenses. It is then up to your creditors to decide whether the proposal is satisfactory. Under the Bankruptcy & Insolvency Act creditors have 45 days in which to do so.
If 50% or more of your creditors decide that the proposal is acceptable, it is considered acceptable by all. The proposal will be approved 15 days later if there are no objections. However, if 25% or more of your creditors do not believe your proposal is suitable, you will need to go to a meeting of creditors where an appropriate proposal will be arranged.
During the course of the proposal you may miss up to two payments without penalty, and the payments will be added to the end of the proposal. However, missing any more than two payments will result in your proposal being annulled. When this occurs, interest charges will be added to all debts, and creditors can apply to have your wages garnished.
A consumer proposal will leave a mark on your credit rating, as a note of the proposal will remain for up to seven years.
A consumer proposal is a good bankruptcy alternative, but it is not something that should be done alone. There are a number of things you will want to review with a licensed bankruptcy trustee before proceeding with the process. To find a licensed bankruptcy trustee in Surrey, British Columbia, click here.
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