Debt Management

There are many reasons people struggle with debt. Sometimes it can get out of hand because people don’t have a clear picture of their own financial situation. Reviewing your assets, liabilities, budget and financial goals with a debt professional who can recommend a clear course of action, is the first step to managing debt.

Consumer Proposals

One of the most popular alternatives to Personal Bankruptcy in Canada is a consumer proposal. This option of Insolvency gives you the flexibility to negotiate a settlement plan with your creditors to pay all or a portion of your unsecured debts over a maximum of 5 years.

With the assistance of a Licensed Insolvency Trustee, a proposal can offer creditors more than what they would receive in a bankruptcy, and the debtor feels more in control with what they can pay.

Personal Bankruptcy

Bankruptcy has several negative connotations, but in reality, bankruptcy is a tool to help get you back on track financially. Bankruptcy provides you with a fresh start. Personal bankruptcy is a legal process administered under the Federal Bankruptcy and Insolvency Act. Bankruptcy provides you with immediate protection against any further collection or legal action by your unsecured creditors, including CRA or GST.

When compared to other debt restructuring plans, personal bankruptcy is often the least expensive and depending on your individual circumstance, can take as little as nine months.

A bankruptcy can only be administered by a qualified Licensed Insolvency Trustee and is regulated by federal legislation.

Creating a budget for your household, is a great first step to get a handle on your debt and how you can begin to reduce it. Dig out those credit card and loan statements to make a list of the outstanding balances and the interest rates you are being charged. This will give you a clear understanding of how much you owe and will make it much easier to create a budget.

Tips to create a Budget using your After-tax income :

• Make a list of what you are spending your money on each month

• Cut out unnecessary expenses and stop impulse purchases. This will give you an idea of what money you may have to pay off debt

• Use extra money to pay off your highest interest debt first.

Debts owed to the CRA are no different than any other unsecured debts, and surprisingly, they may be included in a consumer proposal or personal bankruptcy debt plan.   However, it is important that you obtain protection from the CRA before they register your income tax debt with the Federal Court of Canada.

The collection remedies available to the CRA include:

1.  CRA can set-off amounts owed to you by the federal government such as goods and services tax (GST) rebates or income tax refunds to pay amounts that you owe

2.  A Requirement to Pay (“RTP”) or garnishment may be issued by the CRA to a third party (bank or employer) to garnishee your bank account, wages or other income such as commissions, bonuses or vacation pay.

3.  CRA may register your income tax debt with the Federal Court of Canada to obtain a certificate of the amount you owe.  The certificate is like a judgement which makes your tax debt a public record.

4.  Once the CRA registers your income tax debt with the Federal Court it has the power to seize and sell your assets to apply to your income tax debt.

It is important to discuss and review these tax debts with a Licensed Trustee. Contact us to help you find a solution that works.

Debt can cause much stress on all aspects of your life.   Finding the right solution to eliminate your debt and getting you back on track to rebuilding your finances is the start to stress free living.  A consultation along with proper credit counselling,  will provide you with the tools and knowledge you need to help set financial budgets to regain control of your finances. Live Stress free!