If you’re struggling with debt, you likely have a lot of questions about what filing for bankruptcy or a consumer proposal means for your finances. To help guide you through the process, we’ve compiled a list of the top 10 frequently asked debt questions that our clients ask. Here are the most common queries, answered to give you clarity on what to expect.
What is the impact of a consumer proposal or bankruptcy on my credit?
Both a consumer proposal and bankruptcy will have a significant impact on your credit score. A bankruptcy stays on your credit report for up to 6 years after discharge, while a consumer proposal remains for 3 years after completion. That said, if you’re struggling with debt you may already find you’re struggling with your credit score, and filing can give you a fresh start. With time, you can begin rebuilding your credit.
Learn more in our relevant blog articles:
Can I pay off my consumer proposal before the five years are up?
Yes, you can pay off your consumer proposal earlier than the agreed term. If you’re able to pay the full amount ahead of schedule, your proposal will be completed sooner, which can help you move on from your debt faster.
Learn more in our relevant blog articles:
- Consumer proposal FAQs
- How long does a consumer proposal last?
- Life after filing a consumer proposal
What debts can I include in a consumer proposal or bankruptcy?
You can include most unsecured debts such as credit cards, personal loans, and payday loans in both a consumer proposal and bankruptcy. However, certain debts like student loans (if you’ve been out of school for less than 7 years), alimony, and child support are not eligible.
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Why shouldn’t I keep a credit card when filing a consumer proposal or bankruptcy?
Keeping a credit card during a consumer proposal or bankruptcy can complicate your financial recovery. Creditors can still charge interest, and the debt could continue to grow. Additionally, it may violate the terms of your proposal or bankruptcy, which could lead to further complications.
Learn more in our relevant blog articles:
- Can you keep a credit card with a consumer proposal?
- How to get a credit card after bankruptcy
- How to use a credit card responsibly
What are Spergel’s fees?
At Spergel, we’re committed to providing transparent and affordable services. Our fees are regulated by the government and vary based on the type of debt solution you choose. We’ll provide a clear breakdown of costs and ensure you understand the financial commitment before moving forward.
Learn more in our relevant blog articles:
- Licensed Insolvency Trustee fees: how does it all work?
- How to find a legitimate debt consultant in Canada
- Debt relief scams: how to spot them and how to avoid
How does filing affect my spouse if they are not filing?
If your spouse isn’t filing for bankruptcy or a consumer proposal, they won’t be directly affected. However, if you have joint debts, their credit may still be impacted, and their financial situation could be indirectly influenced by your filing.
Learn more in our relevant blog articles:
What happens to the equity in my home if I file for bankruptcy or a consumer proposal?
In bankruptcy, the equity in your home may be considered as an asset and could be used to repay your creditors. In a consumer proposal, your home’s equity is generally not affected, but it depends on the value and your circumstances. It’s best to speak with a Licensed Insolvency Trustee to assess your specific situation.
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Can I keep my car if I file for bankruptcy or a consumer proposal?
Yes, you can typically keep your car in both bankruptcy and a consumer proposal, as long as its value isn’t too high and you can continue making payments. If your car is fully paid off, it may be subject to the bankruptcy process, but you can often work out a solution to retain it.
Learn more in our relevant blog articles:
How long does it take to rebuild my credit after filing?
Rebuilding your credit after filing for bankruptcy or a consumer proposal can take time. Generally, it will take a few years, but by demonstrating responsible financial habits, such as paying bills on time and keeping debt levels low, you can start improving your credit score.
Learn more in our relevant blog article:
How do I rebuild my credit and what do I do with old accounts reporting?
Rebuilding your credit involves making consistent payments, applying for secured credit cards, and checking your credit report regularly to ensure accuracy. As for old accounts, if they’ve been paid off, it’s important to ensure they’re reported as “closed” or “paid” to avoid confusion and negative marks on your credit report.
Learn more in our relevant blog article:
If you’re struggling with debt, or have debt questions, understanding your options is the first step toward financial freedom. Whether you’re considering a consumer proposal or bankruptcy, our team at Spergel is here to help. Book a free consultation with one of our Licensed Insolvency Trustees today, and let’s create a plan to get you back on track. Don’t wait – take the first step toward a debt-free future now!
