Over the last 2 years, Canadian mortgage rules have changed significantly, making refinancing harder, and with interest rates going up this could shift supply and demand, thereby impacting housing values. We often have clients come to us wondering how to get out of debt amidst these changes. This week we’re covering two of the most popular options: a consumer proposal and bankruptcy.
When you’re overwhelmed by your financial situation and concerned about how to get out of debt when it seems to have taken over your life, know that you’re not alone. Thousands of Canadians struggle with such concerns on a daily basis. Both a consumer proposal and bankruptcy offer significant relief from debt that has become unmanageable, giving you a chance to start fresh.
A consumer proposal is a legally binding agreement between you and your creditors. It is an arrangement that’s negotiated with your creditors by a Licensed Insolvency Trustee wherein an amount to be repaid is proposed, and once accepted, usually reduces your debt and results in one monthly payment.
The benefits of a consumer proposal also include protection from collection action (and a stop to all currently being levied against you), no interest, and a repayment term of 4-5 years, not to mention a fresh start financially.
A bankruptcy is similar in that it is a legal process wherein you repay a portion of your debts to your creditors. A Licensed Insolvency Trustee administers your bankruptcy, distributing funds to your creditors as repayment. When you file bankruptcy, collection action stops, as does interest.
During the term of your bankruptcy, which can last for as few as nine months, you will have certain obligations to fulfill including providing a monthly income statement to your Trustee and attending credit counselling sessions. Once your bankruptcy is complete, you will be discharged and can start on fresh financial footing.
Know that there is no ultimate silver bullet, no magical formula. Even in bankruptcy you have to pay something, but the end results will leave you with significant relief. Both of these options are very valuable, and discussing your situation with a Trustee is the best way to find out which one is best suited to your situation.
If you’re wondering how to get out of debt, we’re here to help. With over 25 years of experience, Spergel can help you find the right solution for your situation.
Call us today, toll free, for a free consultation: 310-4321.