Alternative to Bankruptcy – A Detailed Guide By GVCPS
Bankruptcy is not an easy way out. People who file bankruptcy are not walking away from their debts with no consequences. In addition, despite popular belief, not all debts can be discharged by claiming bankruptcy. Bankruptcy and debt can be very complicated. Personal bankruptcy is an option of last resort for people who are overwhelmed with debts they cannot repay. Finding alternatives to bankruptcy and getting more information is important before taking such a drastic step.
Personal Bankruptcy in Vancouver BC – Bankruptcy might be the first thing you think of when you realize that you can’t keep up with your debts. Before declaring bankruptcy, you need to know what your alternatives to bankruptcy are, how the process works and how it will affect you and your family in the years to come. Let us help you avoid a mistake by explaining all of your alternatives to bankruptcy first.
Not all debts can be included in bankruptcy, e.g. secured debts will survive a bankruptcy because they can not be included. Unsecured debts, which some people call non secured debts, can be eliminated, however, debts that are included in a bankruptcy are not always discharged. Many people are also not aware that creditors, their bankruptcy trustee or the Office of the Superintendent of Bankruptcy (OSB) have the option to oppose someone’s discharge from bankruptcy. There are certain bankruptcy rules that need to be followed. For more detailed information regarding bankruptcy laws:
Debts That Can Be Included In Bankruptcy
- Credit card debt including retail store cards
- Unsecured lines of credit
- Personal loans not secured by any asset
- Income tax, HST and property taxes
- Unpaid utility bills, cable and phone bills, insurance or membership payments
- Medical bills
- Payday loans
Unsecured Debts Not Discharged In Bankruptcy
- Student loans if it has been less than 7 years since your ceased being a student
- Government overpayments, e.g. if you were paid too much in EI benefits, you will still need to repay the surplus
- Alimony and child support
- Fines and penalties imposed by the court
- Debts due to fraud
Secured Debts Not Discharged In Bankruptcy
A debt secured by a mortgage on an asset, such as your house or car, will not be discharged by bankruptcy. However, bankruptcy and secured debts complicate each other.
- Property and Mortgage – Are your payments on the mortgage up to date? If not, the mortgagor can foreclose regardless of whether you are bankrupt. In the case of a house, are your payments on municipal taxes and utilities up to date? If not, the city or BC Hydro can place a lien on the house, changing those debts from unsecured to secured.
- Equity in the Property: If you have positive equity, beyond any limit on its bankruptcy exemption value, the excess is considered an asset to be included in your bankruptcy estate. This can happen by your Licensed Insolvency Trustee’s seizing and selling the asset. However, if you can get the amount from some source like your family, you could keep the asset.
- A general summary of the equity you are able to keep is: Equity in your primary residence in Greater Vancouver and the Greater Victoria Regional District = $12,000. Outside these districts, the amount is = $9,000.
If you are having trouble paying your mortgage and you are worried that you might be facing foreclosure, your mortgage lender can still foreclose regardless of whether you are bankrupt. Contact us for help right away as you will have more alternatives to bankruptcy available to you and you will avoid foreclosure if you obtain help sooner than later. We have helped many clients with alternatives to bankruptcy by helping clients keep their equity in their property while protecting client’s credit.
We provide Free consultation to discuss the different alternatives to bankruptcy and alternatives to bankruptcy foreclosure that are available to you. You can get more information about avoiding bankruptcy and avoiding foreclosure by calling us at 604-812-3718 or emailing us email@example.com
Your Credit Rating & Bankruptcy in British Columbia
Bankruptcy is one of the worst things you can do to your credit rating. There is no easy way to obtain credit after you have legally eliminated your debts through bankruptcy. It takes time and patience before creditors trust you enough to lend you money again. Not being able to take out a loan, renew your mortgage or apply for a low interest rate credit card can impact your financial plans and put your life on hold for years. It is important that you research all of the alternatives to bankruptcy that are available to you.
Our team of legal experts can advise you with Alternative to Bankruptcy including:
- A Consumer Proposal is a formal, legally binding process which involves a reduction of unsecured debt, or an extension of time for repayment of the debt, or both. The term of a Consumer Proposal must not exceed five (5) years, and no interest accumulates during the term of the Consumer Proposal. A Consumer Proposal is legally binding on all types of unsecured creditors (including government debts such as unpaid taxes and student loans) provided that the Consumer Proposal is accepted by creditors holding the majority in dollar value of proven claims. A Consumer Proposal is administered by a Licensed Insolvency Trustee.
- A Debt Management Plan (“DMP”) is an informal (i.e., not legally binding) debt repayment plan which is arranged through a licensed, accredited, non-profit credit counselling organization. A credit counsellor works with the debtor and creditors to develop a more manageable and affordable debt repayment plan. Under DMP, credit card and similar unsecured debt payments are consolidated into one affordable payment which is made to the credit counselling service, who then distributes the payment to the creditors. Licensed, accredited, non-profit credit counsellors are effective in negotiating with creditors to reduce or eliminate interest, which helps reduce overall costs. Many types of debts, such as unpaid income taxes, student loans and other government debts cannot be part of DMP.
- A Consolidation Loan is a loan provided by a bank, credit union or finance company to pay out other debts and consolidate several monthly payments into one monthly payment. A consolidation loan requires an application and approval by the lender, who will consider the debtor’s credit rating, income, assets and debts. Many lenders require the debtor to provide security or collateral for a consolidation loan. Interest rates on consolidation loans can be high and will vary from lender to lender.
- Consolidate your debts with a home equity line of credit (HELOC): A home equity line of credit gives you access to the equity in your property and it is secured against your property. The interest rate is low because you are using your property as collateral. Alternatively, if you have little or No Equity and need to sell your property but cannot sell through traditional methods or if you are having mortgage payment problems, we can either buy your property for cash or take over your mortgage payments.
Our Company, GVCPS, is a Real Estate Investment Company who has experience and knowledge regarding the Bankruptcy laws and specializes in providing you with Alternative to Bankruptcy. Our interest is in helping our clients to resolve their financial burdens and to help them gain a fresh start on their financial future. Our mission is to counsel our clients to understand their individual needs and then provide our clients with the best solution to their situation.