Do I Qualify For Debt Relief? Understanding Your Options
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By Bromwich+Smith Staff | 1100 words | Reading Time: 5 minutes and 30 seconds| Date: 2023/10/06
With the financial hits that many Canadians have encountered this year, how are you feeling when it comes to your financial health? Like so many, are you struggling to pay off credit cards in full, worried about the rise of groceries, fearful about what your new mortgage or rent payments will be when they come up for renewal? If so, you are not alone. Many individuals find themselves struggling and unsure where to turn for help. This doesn’t have to be the case. Let’s explore your options and see if you can qualify for debt relief programs.
Do You Qualify for Debt Relief?
To qualify for a consumer proposal or bankruptcy in Canada, you must meet two main criteria:
You MUST be Insolvent: In the most simple term, you are unable to pay your debts as your financial obligations outweigh your ability to meet them.
Minimum Debt Requirement: You need to owe a minimum of $1,000 in unpaid debt that you are unable to repay. However, if you have the financial means to pay off your existing debt but need more time, there are alternative options available, such as debt consolidation loans.
There really is no magical solution that will work for everyone as each individual's financial situation is unique. If you're unsure which debt relief option is right for you, consulting with a Debt Relief Specialist, like those at Bromwich+Smith, can provide you with the information you need to make an informed decision. These professionals understand that what works for one person may not work for another and have over 20 years experience negotiating with creditors directly.
Eligibility for a Consumer Proposal
A consumer proposal is a legal process in Canada that allows individuals facing financial difficulties to negotiate a repayment plan with their creditors. To be eligible for a consumer proposal, there are things to consider.
High Credit Card Balances: If you can't pay off your credit cards in full or are carrying a balance of more than 50% of your overall credit limit, you may be eligible.
Using Credit for Bills: If you find yourself relying on credit to cover your regular bills, it's a sign that you may need debt relief.
Creditor Communications: Receiving phone calls or letters from creditors due to overdue payments is a clear indicator that you should explore debt relief options.
Exhaustion of Savings: If you've faced a life-changing event and have depleted your savings, and can't catch up with your debts, a consumer proposal may be a viable solution.
Monthly Deficit: If your monthly income consistently falls short of covering your bills, and you have looked into various ways to reduce your debt, or add to your income it's time to consider debt relief.
To be eligible for a consumer proposal:
Have total debts less than $250,000 (excluding the mortgage on your primary residence).
Possess a stable source of income to ensure you can make monthly payments.
Have no prior proposal proceedings that are still open.
Filing a Consumer Proposal if You Are Already Bankrupt
If you have declared bankruptcy but your financial situation has changed, it's possible to transition to a consumer proposal. This change can help reduce your monthly payments by extending the repayment term, making your debt more manageable.
The Importance of a Licensed Insolvency Trustee
Licensed Insolvency Trustees hold a pivotal role in the debt relief process. They have the legal authority and expertise to navigate complex financial situations, making them distinct from other debt relief providers. Avoid working with unlicensed programs, as they may come with hidden fees and delays. Choosing the right professional for debt relief is paramount to your financial recovery.
Remember, only a Licensed Insolvency Trustee, like Bromwich+Smith, has the legal authority to administer a Consumer Proposal or Bankruptcy once eligibility has been determined. While other businesses may offer debt relief programs like a Consumer Proposal, in Canada, only a Licensed Insolvency Trustee can file this paperwork. Be sure to ask if they are a Licensed Insolvency Trustee before signing up for any program. If they're not, they'll be required by law to engage an external Trustee, which could add unnecessary fees and time to the process.
Seeking Help for Overwhelming Debt
If you are facing overwhelming debt, remember that you are not alone. Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and get your life back on track. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1.855.884.9243, or request a call back at contact us page.
FAQs Related to Debt Relief
1: What are the main criteria to qualify for a consumer proposal or bankruptcy in Canada?
To qualify, you must be insolvent, meaning you're unable to pay your debts, and have a minimum debt requirement of $1,000. If you can repay your debt with more time, alternatives like debt consolidation may be considered.
2: How do Debt Relief Specialists assist in determining the right solution for individuals?
Debt Relief Specialists, like those at Bromwich+Smith, provide personalized guidance based on over 20 years of experience. They understand that each financial situation is unique and offer insights into suitable debt relief options.
3: What are the eligibility criteria for a consumer proposal in Canada?
To be eligible, you must have total debts less than $250,000 (excluding your primary residence mortgage), a stable income for monthly payments, and no prior open proposal proceedings.
4: When is transitioning from bankruptcy to a consumer proposal advisable?
If your financial situation changes after declaring bankruptcy, transitioning to a consumer proposal may be advisable. This can reduce monthly payments by extending the repayment term, making debts more manageable.
5: Why is a Licensed Insolvency Trustee crucial in the debt relief process?
Licensed Insolvency Trustees have legal authority and expertise to navigate complex financial situations, distinguishing them from other providers. Avoid unlicensed programs to prevent hidden fees and delays in the debt relief process.
6: How can one determine if a debt relief provider is a Licensed Insolvency Trustee?
Ensure that the provider, like Bromwich+Smith, is a Licensed Insolvency Trustee before signing up for any program. Only a Licensed Insolvency Trustee can administer a Consumer Proposal or Bankruptcy in Canada, ensuring legality and efficiency in the process.
7: What are indicators that one may be eligible for a consumer proposal?
Indicators include high credit card balances, reliance on credit for bills, communications from creditors about overdue payments, depletion of savings after a life-changing event, and a consistent monthly deficit.