A number of my childhood friends ending up facing bankruptcy throughout the crisis in 2008. It was a severely sad time and everyone lost next to everything. There was however one interesting thing I learned from the entire process. It has to do with the Canadian laws and the bankruptcy act of Canada in particular.
We all know about bankruptcy. It’s something we use in dire needs, in order to eliminate all our debts by selling off all our assets and returning what we can to all of the creditors.
But did you know there’s something else you can use? Another tool in the tool box if you will. If you’re interested in keeping your assets (for example you have a lot of equity in your home and you don’t want to give that up). You can use something called a consumer proposal.
Now, what the consumer proposal process really looks like is something like this:
- Meet with a Licensed Insolvency Trustee
- Discover your debt situation and see if a CP (Consumer Proposal) is even the right option.
- The LIT (Licensed Insolvency Trustee) will literally put a proposal to all your creditors together that you will only pay so much. For example one saying that you can make 50 cents on the dollar over the next five years. If more than 50% of the creditors (weighted debt average) agree, the proposal is then deemed accepted by everyone.
- You will then make fixed monthly payments to the LIT and they will pay creditors accordingly.
Hopefully you will find this option as life changing as I did!
For more information about consumer proposals in general, visit: https://www.consumer-proposals.org/