Consumer Proposal or Bankruptcy? What Is the Best Choice for You
June 16, 2020
If you are struggling financially, you are not alone. Many Canadians are in the same boat. COVID-19 has drastically altered the economic landscape in a
Bankruptcy
Bankruptcy is a difficult decision to make
As with most of life’s challenges – it can be a process of learning, growth, and positive renewal.
Contact us for your FREE no obligation consultation
stefania cicchino
13:54 27 Mar 21
We worked with Jackie. She is very professional and very caring. She is quick to respond and really cares about helping the people in front of her. I went with my uncle, who was scared of the whole process and mentally delayed. Jackie took her time with us and made him feel at ease. She carefully explained things multiple times and was very encouraging. She was a shining light in a difficult process.
Christine Lowe
16:44 12 Mar 21
Jackie is very professional, kind, supportive and super helpful. She was able to help me get back on track. Great service and I will definitely recommend them.
Belen Trava
19:01 11 Mar 21
Jackie provided me excellent service, was very helpful, and she made feel very secured and she listened to all my concerns.i was speechless with excellent service.
nicole lowartz
17:02 11 Mar 21
Had a great experience and successful result working with Carol at David Sklar & Associates! I was well informed and received great guidance after just the first conversation! She handled everything and helped me build a budget that is realistic and that i can really stick to! I highly recommend Carol and her team at David Sklar. Give them a call!
Kirah32
02:07 03 Mar 21
I've used these services twice and they have always been understanding, supportive and informative. They give you hope when you feel like there is none. I've referred multiple people to them and they've all had the same professional experiences. Jackie Stanley was amazing and got the job done. Thank you!
Kristine San Gabriel
15:14 02 Mar 21
Dealing with any kind of debt can be stressful. Jackie is amazing! Professional, warm and extremely helpful to say the least! She made sure to answer all of our questions, address any concerns and made this whole process as smooth as possible.
Clayton Surujbally
17:09 18 Feb 21
Working with David Sklar has been an easy and detailed process. I am especially thankful for the personal services provided by Jackie Stanley as she has been very informative and always ready to answer any questions or concerns in a timely manner. I highly suggest working with Jackie if the opportunity presents itself.
Chris Thompson
17:11 07 Feb 21
On February 2 l made the somber driveTo David Sklar and associates.I had known this location from having drovePast it many times over the years.I made a appointment using the phone numberOn their door in Pickering, OntLater that day l had a consultation withTrina Powell.Immediately upon meeting with her l wasBecomming more relaxed with the proceedings.Trina, was very down to earth, and very professional.We all have our calling, l can only gather sheHas found hers, and she is very good at herJob, and career.I met with her again two days later but on thisVisit l felt more relaxed, and self assured of myDecisions, having already met with Trina.Thank you! Hat's off to you.I also had a phone zoom call with MarkTo whom as well was very easy, and comfortableTo talk to,Thank you, Mark.The team at David Sklar and associatesShould take great pride, and comfort when theyHelp people, like me and probably so many others.Thank you.
Desiree Balkaran
17:09 07 Feb 21
I have dealt with this company before many years ago when I did my bankruptcy , and found to be very trustworthy, professional, and right at ease. No judgement, very understanding and very supportive. So of course would come to then again when this time did the debt consolidation. The staff is friendly and goes over all the details with you and answers all your questions so you know exactly what to expect and make an informative decisison. I aslo like how if I had any questions could leave a message or email the company and how promptly they answer me back. Thank you David Sklar & Associates for getting me back on the right track and living a life of debt free again. I have my freedom back thank you for all your help and support. Amen 🙏
Elizabeth Thomas
09:18 04 Feb 21
I am so grateful to Rhoda Lewis for an amazing opportunity to start fresh, she is very knowledgeable, professional and very friendly. I felt so comfortable from the moment I walked into her office, I definitely would recommend Rhoda to anyone who is looking for help. I love and appreciate you very much for helping me. After all these years I still kept in touch with you via email just to say thank you. Thank you again so very much and continued blessings.
Andrei Podeanu
02:09 01 Feb 21
Jackie Stanley will take you step by step in explaining the process professionally, answering all the question I had over the telephone or e-mail. We are very satisfied and grateful for her work and effort. Dan Podeanu
Daniel Domingues
22:19 23 Jan 21
Ashley Carter was very nice to me and professional and she helped me with my issue and she answer my questions in email. She helped me a lot and she gave me less stress.
1 blaze
18:36 21 Jan 21
Jackie Stanley take you step by step in explaining the process professionally, replying on our every question over the telephone or e-mail. We are very satisfied and grateful for her work and effort.
Tree Broker
14:33 20 Jan 21
Jackie and the team at David Sklar and Associates took my very stressful situation and made me feel at ease. I was treated with respect and understanding from the start of my process right through to the end. Prompt email and phone responses made it feel like I was at the top of their priority list.Jackie and the team at David Sklar are the best in the business. I would highly recommend using their services.
Jeremy Y
14:04 20 Jan 21
Has helped me put to gather all my financial debt and find a reasonable offer and deal in making payments towards all my debts as one. Has been patient and kind service one on one. A big thanks to Jackie for helping guide me through my process!
WhoisDriaB
02:09 20 Jan 21
Jackie is an amazing person, she takes her time to make sure you understand everything. Every question I had she was always a email or text away with a quick response. Thank you again
Can I file for bankruptcy?
In order to be eligible for bankruptcy you must be, 18 years of age or older and you need to be insolvent. This means you owe a minimum of $1,000 and cannot afford to make payments when they are due.
What debts cannot be eliminated by bankruptcy?
Some debts cannot be eliminated through bankruptcies. These include child support, alimony, student loans (within 7 years of completing studies) court-imposed fines and fraudulent debt.
What debts will be eliminated by bankruptcy?
A bankruptcy eliminates most, if not all, of your unsecured debts. Including any credit cards, lines of credit, personal loans, payday loans, and income tax debt. When you file for bankruptcy, these debts will be eliminated, and your creditors will no longer be able to pursue you for collection.
Bankruptcy In Ontario
Bankruptcy should never be entered into lightly and should only be considered after consulting with a licensed insolvency trustee. We’ve helped thousands of clients weigh the pros and cons of filing for bankruptcy and when needed, navigate this process.
When you file for personal bankruptcy in Ontario, you are declaring to the courts and your creditors that you are unable to pay your debts as they come due and have insufficient assets to cover those debts.
What can I keep if I file for bankruptcy?
Everyone’s situation is different, depending on your financial situation, some assets may be exempt, including:
- If you have less than $10,783 of equity in your home, it will be exempt
- Household items, furniture, clothing, equipment up to $14,180 in value
- One automobile up to $7,117 in equity
- Tools used to earn your living up to $14,405 in value
- Pension
- RRSPs (Except for contributions made 12 months before declaring bankruptcy)
How does surplus income impact my bankruptcy?
Each year the Superintendent of Bankruptcy outlines what they feel is a basic income for different family sizes. When filing a bankruptcy your income and size of your family impacts the amount you will need to pay and for how long. Surplus income is any income earned above the standards set by the Superintendent of Bankruptcy. You are required to pay half of any surplus income you earn above that amount.
I do not want to lose all of my assets, is there an alternative?
Most people we speak to understandably do not want to file for bankruptcy or lose the majority of the assets they have worked so hard for. The alternative to Bankruptcy for individual’s is a Consumer Proposal.
A Consumer Proposal will allow you to keep your assets including your home and cars. However, you must continue to make payments on those assets. In other words, your mortgage and car payments won’t be affected by a Consumer Proposal. The unsecured debts reduced by a Consumer Proposal are credit card debt, personal loans, lines of credit, pay day loans, and similar types of debt.
A Consumer Proposal is a smart decision for debtors with significant assets, who have stable income, or simply just want to avoid bankruptcy and not have it appear on their credit report.
Does filing for bankruptcy in Ontario affect my spouse?
If you file for bankruptcy, it will not affect your spouse. The only exception to this rule is if your spouse has co-signed or guaranteed your debt, or If you both have a credit card on the same account. It’s also possible that assets with equity held jointly with your spouse, may be affected.
The difference between a bankruptcy & a consumer proposal
When you file a bankruptcy, you are permitted to keep certain assets that are exempted by the Ontario Execution Act but are required to submit all other assets for settlement.
In a Consumer Proposal, the person filing is able to keep all their assets (as long as they continue to make any required payments i.e. mortgage payment, car loans etc).
How It Works:
Find and meet with a Licensed Insolvency Trustee to review your current financial situation and discuss your debt repayment options. At the end of this initial meeting, your Trustee should be able to advise you if declaring bankruptcy is the preferred course for you or if additional information is required. Both you and your Trustee need to agree this is the preferred path before proceeding.
The Trustee will help you to fill in the necessary forms, and then submit your file to the OSB.
- You will no longer deal directly with your unsecured creditors (your Trustee will advise you on how to proceed with your secured creditors)
- You will stop paying your unsecured creditors
- You will make payments to your trustee for fees, assets or surplus income
as appropriate - Your creditors will stop all lawsuits and collections actions against you.
The Trustee will sell or otherwise realise the equity in your non-exempt assets and hold the proceeds for disbursement to your proven creditors. In many cases, Real Estate Property and RRSPs may be yours to keep.
Depending on your situation, some assets may be exempt from seizure for sale by the Trustee. In Ontario, in accordance with the Ontario Execution Act, some of these asset exemptions may include:
- Clothing: All necessary clothing for you and your dependants
- Household Furnishings and appliances: Up to a value of $14,180
- Tools of Trade: Tools used to directly earn a living to a value of $14,405
- Motor Vehicle: Equity in one motor vehicle up to a value of $7,117
- House Equity: To a maximum of $10,783. If over $10,783, no exemption
All your creditors will be notified of your status by the Trustee.
If your creditors or the OSB requests a creditors’ meeting, you must attend. During the meeting, details of your bankruptcy, confirmation of the Trustee, directions to the Trustee from your creditors, and other matters may be discussed and voted upon.
If the OSB requests an examination of you by an officer of the OSB, you must attend. This will be an examination (under oath) and will deal with such issues as your financial conduct, the causes of your bankruptcy, and how your property will be administered.
You will be required to attend two financial counselling sessions where you will discuss the circumstances that led to your insolvency, ways to avoid them in the future, and how to manage your finances in the future.
The Trustee will send a detailed report to the OSB and to your creditors on your performance of the bankruptcy requirements, your current financial situation, and recommendations as to whether or not you should be legally released from your debts.
If you or one of your creditors does not agree with the Trustee’s report in regard to payments/surplus issues, a formal mediation process is available. If a creditor disagrees with anything else, they may send a notice of opposition.
If the Trustee, any creditor, or the OSB opposes the discharge, matters will then be dealt with in court.
If there are no objections or irregularities, qualifying first-time bankruptcies can be given an automatic, absolute discharge 9 months after the initial filing for bankruptcy without the need for a hearing.
If a creditor, the Trustee, or the OSB requests a hearing, or if you fail to qualify for an automatic discharge, a court hearing for the discharge will be held. Your presence will be mandatory.
If there is a hearing, the court will determine what type of discharge you will receive:
- Absolute discharge: Releases you from the requirement to pay those debts covered in your bankruptcy.
- Conditional discharge: The court requires you to perform other actions and or make further payments to your estate before an absolute discharge is issued.
- Suspended discharge: The court sets the date of your absolute discharge to a future date.
- Discharge refused: The court can refuse you a discharge.
If you have received an Automatic Discharge, An Order of Absolute Discharge, or you have completed the terms of either an Order of Suspended Discharge or an Order of Conditional Discharge, you will be released from paying the debts covered in your bankruptcy.
Bankruptcy FAQ
People often file for bankruptcy when they are faced with out of control debts due to interest, constant collection calls, and creditors threatening to take legal action. This is an option pursued when you can’t afford to pay back your debt and need relief.
Unless your assets are protected, you will either have to pay to keep your assets or turn them over to the Trustee to be sold for the benefit of your creditors. Your protected assets will typically include all or a portion of:
- One automobile
- Household assets
- Personal belongings
- RRSP savings
- Some equity in your home
- Tools of trade
A bankrupt individual is allowed to keep certain assets exempted by the Ontario Execution Act but is required in certain situations to submit all other assets for settlement. In a Consumer Proposal, however, the individual filing the Proposal can keep all their assets. This is provided they continue to make any required payments (i.e. mortgage, car loan).
Bankruptcies are often a ‘last resort’ option reserved for when all other options have been considered. Even then, there are situations where an individual may choose a Consumer Proposal:
- The debtor has a professional designation that prohibits the filing of bankruptcies
- The debtor has assets (i.e. a home or family jewellery) that they are unwilling to part with
- The debtor is considering sponsorship of a family member overseas
- The debtor simply does not want to
- The debtor’s spouse may have to declare bankruptcy too
- The debtor has filed bankruptcy in the past and realizes how difficult another filing will be for them
The Professionals at David Sklar & Associates will help you to make the decision that best fits your needs.
Bankruptcies will be put on your credit record, and all creditors (secured and unsecured) will be notified. Your employer will only be notified if the Trustee is required to stop a garnishment of your wages. Bankruptcy is a Court process, so a record of your bankruptcy is maintained in the Court’s records, which can be accessed by the public.
Not necessarily. Depending on the amount of equity in your home, you may be able to pay the value of the equity to your Trustee for distribution to your creditors. As long as you are current with your mortgage payments, you are normally able to maintain the payment to the secured lender and keep your home. You should discuss this further with your mortgage lender and your Trustee.
Yes. Your Trustee will provide further information.
The cost of bankruptcy depends on several factors, including the value of your assets and your income. Speak with a Licensed Insolvency Trustee to get further details.
Not necessarily. When you have assets that need to be sold or distributed, the Trustee will handle their disposal. When you have assets that you do not have equity in (that is you owe more on secured loans for these assets than the assets are worth) and your Trustee agrees, you may be able to negotiate with the holders of the secured loans to keep those assets.
In most cases, as long as the debt was incurred beforehand, it is a provable debt, the Trustee will send notice to the creditor, and it should be cleared.
If you do not receive a discharge, once the Trustee has completed the administration of your estate and the Trustee has been discharged, you will remain responsible for your debts, plus interest, and your creditors may once again commence collection action against you.
You will need to speak to your Licensed Bankruptcy Trustee regarding your unique situation.
Usually, bankruptcies take 9 months from filing to discharge. That said, there are a number of factors that can change the length of bankruptcies. For example, if there is ‘surplus income’, if this is not your first bankruptcy, if there are disputes from your creditors, or you fail to comply with your duties as a Bankrupt, the process may take longer.
If you are a resident of Canada, owe more than $1,000, are 18 years of age or older, and have explored all other debt repayment options, you may be eligible to file for personal bankruptcy.
Personal bankruptcies only cover unsecured debts. However, certain unsecured debts are not covered by bankruptcies such as child support, alimony, fines and penalties imposed by the Court, and debts that are found to be fraudulent. Student loans may be covered if the individual ceased to be a student for more than 7 years before filing and meets other requirements. Secured debts such as mortgages and car loans are also not covered in bankruptcies unless you relinquish ownership of these assets. It is always advisable to speak with your Trustee for details on your specific situation.
At David Sklar & Associates, our team is here to help you every step of the way. We not only explain every option available to you, we also give you the tools to help rebuild your wealth. Speak to one of our licensed debt professionals today. Let us show you there is hope and a way to financial freedom! The calls will stop, the stress will disappear, and you can start focusing on your future!
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