Consumer Proposal or Bankruptcy? What Is the Best Choice for You
June 16, 2020
Read ahead to find out why the insolvency rates are so high and to learn what debt relief option could work best for you.
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Personal Bankruptcy Ontario
Bankruptcy is a difficult decision to make
Personal bankruptcy in Ontario is a form of debt relief. It is often considered a last resort for people who are unable to pay back their debts. As with most of life’s challenges, it can be a process of learning, growth, and positive renewal. If filing bankruptcy is the right solution for you, we will hold your hand before, during, and after the process is complete.
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Based on 708 reviews
Denise Simpson
15:17 09 Sep 21
I have had the privilege of being supported by Jackie S, at David Sklar n Associate.She was helpful, professional and friendly. I was able to get the help I needed at a difficult time in my life. I would recommend anyone who needs support with working out their debts to ask for Jackie, she will be waiting to assist however she can to help you through your debts. She works with a team who is always ready and responsive.Thank you Jackie and your team:)
Alex Lamparter
13:07 03 Sep 21
My experience with Ashley Carter at David Sklar and Associates was very pleasant and professional. The process was made easy by Ashley with her help in answering my questions and concerns.
Nicole Minister
17:43 02 Sep 21
Ashley she was extremely helpful,super friendly and understanding my situation. I am very please for the service I received and I will recommend this Company to anyone in need of consolidating. Thanks so so much.
rr 28
12:44 21 Aug 21
I finally pulled the trigger and seek help from this team. I tried to pay my debt in the way it should be until the pandemic made it even worst and couldn't keep up with my payments anymore. Jackie is an amazing person, I told her the problem, she gave me the solution and gave me a variety of options and walked me through the process. That simple. Thank you so much.
Vi Smith
18:09 13 Aug 21
Dealing with Jackie made the process so much more comfortable. From my first phone call with her I never felt like I was being looked down on. Jackie made this as easy as being in this situation could be.
fidel Cruz
14:35 24 Jun 21
I have to say, I never thought that such process could have been so quick and easy. But then again I guess that's what happens when you deal with professionals. I dealt personally with Rodha Lewis, who was very attentive to my personal issue and very professional on her work. She's someone who will actually take her take and talk to you about the process and help you as much as she can. I am very grateful to her and very appreciative of her work. I couldn't have dealt with someone better. Thank you very much Rodha for your work.
Maria Curbelo
13:43 23 Jun 21
I just completed my proposal and I am thrilled. Rhoda was delightful to work with. She helped me end the phone calls and start rebuilding my life. I highly recommend the services here and will always recommend to anyone who asks. Definitely seek out their services if you are in need of some help.
Jelena Petrovic
18:06 20 Jun 21
Very professional and fast service! Also, personable!.. they don't treat you like a number, but like a person.From the time I first contacted them, until I was set up there has been not more than 7 days.I dealt with Jackie, she was great!
Mark Simmonds
21:50 16 Jun 21
I would just like to say thank you to David Sklar & associates for helping me out in this difficult time I was in way over my head, I was introduced to Jackie Stanley, at that moment things got better the calls stop. Jackie was so professional helpful, trusting answered all my calls all my Text, and emails professionally and respectful!! I can’t believe it, and now I’m gonna build my credit rating back up and have my life back Thank You, Jackie Stanley at David Sklar& associates, for doing an outstanding Job!!!!
Richelle Barriault
17:57 16 Jun 21
I am not very good at putting words together especially when your speechless for all the help from such a friendly happy non judgemental team. From being financially stressed and depression hitting all at once I connected with Jackie Stanley💯❤❤ from David Sklar team in a whole other level,she is an absolutely joy to deal with and very informative let me know there is light at the end of the tunnel.. despite my struggle the amazing lady Jackie Stanley was able to put a smile on my face and make me laugh super happy and grateful 🙏I was able to connect with her from David Sklar &Associates team I 💯 percent recommend her (Jackie Stanley) and will continue to recommend her. To any one looking to get out of debt or have any questions belive me when I say you will not be disappointed with Jackie she's such a great person and I'm lucky to have been able to recieve the help and guidance from such a wonderful person and you will be also...look no further no where but up from here ...Thank you So so much Jackie much appreciated
Grace Muller
17:55 25 May 21
I must admit that I am so glad I called! I spoke to Rhoda Lewis who right away made me feel at ease. She's so caring and supportive I highly recommend her. Thanks to her my life is now on track! Thank you David Skylar & Associates Inc!
Nicholas Burnett
17:07 19 May 21
Very professional and courteous. Jackie was very helpful and understanding. She was happy to answer any questions I had and we were able to process everything quickly with no hassle.
HN
23:00 06 May 21
I would say my experience with David Sklar was spectacular, they made it really easy for my through the whole process and now 9 months later my bankruptcy is discharged.i would recommend David Sklar to anyone.
A M
14:39 04 May 21
I had a nagging defaulted student loan that was holding me back. There were a few smaller issues that were compounding. The lockdowns really forced me to look into building back my credit and starting fresh.Ashley at David Sklar & Associates at the Keele and Finch location was a blessing. She was thorough in her explanations and answered any concerns I had. She gave me the options and let me decide what was best. After conferring with her, I decided bankruptcy was the best option. She made the process of filing for bankruptcy easy.There's nothing to be afraid of. Stigma attached to bankruptcy but you can reset if you work hard to make it happen.I highly recommend speaking with Ashley if you have any concerns about debt solutions.
Pilar
21:05 28 Apr 21
I highly recommend David Sklar & Associates Inc. They helped me with my finances along with the help of Ashley Carter whom assisted me thoroughly throughout the process of my Consumer Proposal. She is very friendly, professional and updated me occasionally through emails. With her tremendous help, I am very thankful to have accompanied someone like her!
Fribeda Fronda
19:14 27 Apr 21
In behalf of David Sklar & Associates, Ms. Ashley Carter had been working tremendously and diligently to make people’s lives easier and stress free. Through this debt free program, my husband and I had been relieved from the headaches and worries of our financial standing before. Ashley, a soft spoken lady was very approachable and listened to our concerns. She explained to us very clearly the good things that will happen to our best interest. I believe that she is a great asset to the company and an excellent counsellor. My husband and I can’t thank you enough, Ashley, for all your help during those times when we needed it most. As of now, we are enjoying life in our seventies, though how simple it is we are happy because we have the assurance that sooner we will be debt free. Thank you so much Ashley for your kindness and for always being there for us. May God bless you more especially with good health.
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?
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.
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).
There is no greater reward than knowing we made a difference in someone’s life!
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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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