Do you know that there are different types of debt out there? We do, and with the right debt-free plan, we can help you pay off debt – any type of debt.
Did you know that credit card debt is not the same as an old cell phone bill in collections, your student loan, car loan or mortgage? Not all debt is the same and because of this, some debt can’t be eliminated by bankruptcy. We understand the different types of debt and how to deal with them. Let us help you develop a plan to pay off debt that doesn’t go away in a bankruptcy. We’ll explain the different types of debt, what your options are and help you find a debt-free solution.
Sometimes we take on debt without even really thinking about it. For example, that cell phone you put onto your “tab” – it’s a debt. Your gym membership – if you’ve fallen behind – is a debt. The trips you make on toll highways, unpaid parking tickets – these are also debts. To consider your debt free options, it’s important to know what type of debt you have.
Types of Debt
If you’re trying to pay off debt, it’s important to determine what type of debt(s) you have and come up with a debt free plan that will address every creditor. Here are a few common types of debt and how they are treated in a bankruptcy and a consumer proposal.
- Debts from fines, speeding tickets, court-imposed debts for child support arrears or specific types of litigation. Debts in this category don’t typically go away in a bankruptcy. Your plan should clear up your other debts and make room for you to repay these debts.
- Secured debts – vehicle loans, business debts tied to business assets, loans or debts with lien registrations against your property. When a debt is secured it must be paid so that you don’t lose your assets. If your loan payment is too high, these debts may be included in a bankruptcy if sold/auctioned and a “loan shortfall” is calculated. In Ontario, creditors can “seize” (repossess) your assets and sue you for the shortfall balance owed. British Columbia has different rules. In B.C. a creditor can seize your assets and sell them, or choose to sue you for the balance owed – but not both.
- Unsecured debts – loans, credit cards, payday loans, personal loans and student loans fall under this category. Unsecured debts are not attached to your assets. Student loans are subject to a special rule. If you’ve been out of school for more than 7 years, you can get relief in a bankruptcy. To learn more about student loan debt, click here.
Beyond this, there are debts for ongoing services like your cell phone, cable account, hydro bill or property taxes and Canada Revenue debt. Many of these go away in a bankruptcy but should be reviewed on a case-by-case basis to determine your best debt solution.
How to pay off any debt with a consumer proposal
A consumer proposal can help you clear up a wide variety of debts – even debts that don’t go away in a bankruptcy. For example, if you have student loan debt and you have not been out of school for more than 7 years, you can still include it with your other debt(s) in a consumer proposal. Your student debt will still be there when your proposal ends (less whatever you’ve paid through the proposal over the years) but you’ll be working towards repaying everything you owe with one monthly payment. Debt consolidation is one of the key benefits of choosing a consumer proposal as a debt solution.
In some cases, it may be beneficial to offer a consumer proposal that repays all of your debt in full. Your income, assets and the types of creditors you have will have an impact on the proposal offer that you make. To learn more about how consumer proposals work please click here.
The bottom line is, whether a consumer proposal includes and reduces your debt, or simply helps you with an affordable payment plan over 5 years – this debt relief option can tackle almost any type of debt and succeed in conquering it.
How to use a consumer proposal to negotiate with Canada Revenue Agency (CRA)
Tax debt can be tricky to get rid of. Daily interest and penalties mean that your tax debt will continue to grow if you don’t do something about it fast. A consumer proposal can help you negotiate with CRA so that your installment payments are affordable. Your interest and penalties are stopped. We’ll help you make an offer that is fair and better than bankruptcy. CRA will expect that all of your income tax returns, HST and source deduction accounts (if self-employed) are filed up to date. It’s possible to negotiate a decrease in what you owe to CRA. Let’s review your options and see what might work best.
You can pay off debt – all of your debt
It doesn’t matter who you owe, if you have debt, come to us for help. We’ll find a debt solution to help with all of your debt. If a bankruptcy doesn’t make sense or solve your problem, we’ll review your alternatives – FREE of charge. A consumer proposal on its own, or combined with mortgage refinancing, and/or the sale of assets may be the solution that reduces and eliminates your debt problem. We will work with you to protect assets such as your home, car, and education savings plans for your children. If you’ve got unpaid debt, you could benefit from a review of your options with a Licensed Insolvency Trustee.
Getting started with your debt solution
If you’re ready to explore debt solutions to eliminate or pay off debt, let us show you how. We can help you discover how great it feels to become debt-free. Please call 1-877-501-4321 to book your no-obligation consultation today (you can also book online). You owe it to yourself to find the debt solution you need. Don’t let rumours about “this type of debt” or “that type of debt” hold you back from a debt-free life.