PERSONAL INSOLVENCY OPTIONSBankruptcy is not always the best solution. You may have enough income to manage your debts at a reasonable cost over a reasonable period of time. You might consider the following options instead of bankruptcy:
- Credit counselling
- Informal proposal
- Consumer proposal under the Bankruptcy and Insolvency Act
- Division I Proposal under the Bankruptcy and Insolvency Act
RefinancingGenerally most individuals have already tried all refinancing options. Occasionally, re-mortgaging or a consolidation loan is all that is needed. Our qualified counsellors will advise you if this is a feasible option.
Credit CounsellingMost credit counselling societies are funded by donations from the credit card issuers or their parent or other related companies. Generally they attempt to consolidate credit card debt and/or reduce interest charges or payments. Always ask what fees are being charged and how long it will take to pay off the debt at the payments being suggested. There is no formal education required to be a credit counsellor. Anyone can claim to be a credit counsellor. All of Glover-Drennan Inc. counsellors are certified.
Informal ProposalThis is an arrangement you make individually with each of your creditors. The disadvantage to an informal proposal is that it is not binding on all creditors so if a few creditors do not want to accept a reduced payment, you still must pay them in full. Sometimes, creditors that originally are agreeable to your informal proposal will decide to change their minds. Proposals under the Bankruptcy and Insolvency Act are binding on all creditors if a majority vote to accept the proposal and then all creditors are treated equally.
ProposalsThe Bankruptcy and Insolvency Act offers an alternative to bankruptcy using two types of proposals a consumer proposal where the total debts other than mortgages on your principal residence are less than $250,000 and a Division I proposal where your debts exceed $250,000. A proposal, based on your circumstances, may be made to your creditors as follows:
- You may ask the creditors to reduce the amounts owing to them and/or request more time to pay the amounts due.
- A proposal must be made to all preferred and unsecured creditors but does not affect the rights of secured creditors.
- The terms of the proposal must be completed within five years and must offer the creditors at least what they would be paid in a bankruptcy.