Tag: bankruptcy trustee

What Happens if I Default on My Consumer Proposal

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If a debtor is 3 months in arrears of monthly consumer proposal payments the consumer proposal is deemed annulled, which means that creditors can resume collection actions. There is no automatic bankruptcy if a debtor defaults on a consumer proposal.

that fails to make more than 2 payments cumulative during the Proposal will have their Proposal annulled and creditors can resume collecting their balances plus interest less any payments made. While a default on a Consumer Proposal will not automatically result in a Bankruptcy, however, the debtor cannot file another Proposal.

Dealing With Increasing Insolvency Rates

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There are lots of factors but, I think the greatest single contributor is the proliferation of easy credit combined with low levels of financial literacy.  High debt levels limit financial flexibility and the ability to weather and recover from financial setbacks resulting from job loss, reduced income, illness, separation/divorce, and other life events.

Using Your Credit Cards Prior To Bankruptcy or Proposal

Borrowing money with the intent of not paying it back may be considered fraud which is a criminal offence.  Debts from fraudulent activities are not dischargeable in a personal bankruptcy or a consumer proposal.  If you are having a difficult time paying your debts, we recommend that you cease using your credit cards and contact a Licensed Insolvency Trustee to review your situation and discuss your options.

Beware of Debt Settlement Offers

The debt settlement and credit counselling companies would have you believe that they can easily have your credit balances reduced and save you hundreds if not thousands of dollars.   The problem is they cannot guarantee any results.  They will require that you pay them monthly administration fees and/or a percentage of the settlement amount as payment for their services.  But you need to read their documents very closely to find out what happens to all of those fees that you have paid if they are unable to reach agreements with some or all of your creditors.