Debt Relief in Canada

Making the first step to gain control of your debt can feel intimidating. But sharing your concerns with one of our team members means you’ll receive compassionate, non-judgmental advice that can help you make informed financial decisions. Here are some of the other benefits:

• It's completely free
• Feeling no pressure or obligation
• Confidential and comfortable space
• Explore all available solutions
• Reduce stress by understanding your options and next steps

A consumer proposal significantly reduces most unsecured debts you have, including:

• Credit card debt
• Tax debt
• Student loans (if 7 years have passed since you were last a student)
• Personal loans
• Lines of credit
• Payday loans

A consumer proposal is a formal agreement between you and your creditors that’s submitted on your behalf by a LIT. It includes an offer to your creditors to settle your debt for an amount that is normally less than the total amount owing – as much as an 80% debt saving. Most importantly, it allows you to retain assets, such as your car and your home.A bankruptcy is a legal process in Canada legislated under the Bankruptcy and Insolvency Act (BIA) that’s designed to give a debtor a fresh start. A bankruptcy in Canada can only be filed with a LIT. In bankruptcy, some assets may need to be surrendered for the benefit of your creditors. However, you do not lose everything when you file for bankruptcy. Exemption rules allow you to keep certain assets, depending on your province and situation.

There are two types of debt consolidation – high-interest debt consolidation loans and interest-free consumer proposals.Many people know about debt consolidation loans, but know less about an interest-free option called a consumer proposal. It’s a better way to consolidate and reduce your debt in many situations. Farber does not provide loans. If you’re looking for a loan, we suggest you speak to your bank first to see if you qualify for one.For many Canadians, high-interest and hidden-fee debt consolidation loans can lead to even more financial stress and payments that even exceed the original debt. A consumer proposal is a federally regulated process that helps Canadians reduce and eliminate debt without loans and rebuild their financial security. A debt consolidation loan does not eliminate interest, stop collection calls, wage garnishment, or offer the legal protection a consumer proposal can.

Most people have some debt, usually in the form of a mortgage, car loan or line of credit. But how do you know when it’s too much? Here are a few ways to tell if you need help.

• Can’t pay monthly expenses without a credit card/line of credit
• Only making minimum payments every month
• Taking out more loans to pay monthly expenses
• Receiving calls from creditors
• Missed payments
• Regularly use overdraft protection on your bank account
• Feeling stressed or worried about your debt
• Hiding your debt or your spending

Most people have some debt, usually in the form of a mortgage, car loan or line of credit. But how do you know when it’s too much? Here are a few ways to tell if you have too much debt.

• Can’t pay monthly expenses without a credit card/line of credit
• Only making minimum payments every month
• Taking out more loans to pay monthly expenses
• Receiving calls from creditors
• Missed payments
• Not sure how much debt you have
• Regularly use overdraft protection on your bank account
• Feeling stressed or worried about your debt
• Hiding your debt or your spending

Filing a consumer proposal doesn't damage your credit forever. While it impacts your credit rating, it's often already been affected by missed or late payments. But many people have been making minimum payments for some time, which helps maintain stronger credit scores.Addressing your debt through a consumer proposal benefits you in the long run, though it takes time. A consumer proposal helps you rebuild your financial life. By ending the minimum-payment cycle, you can responsibly acquire new credit. The two mandatory financial counseling sessions teach valuable money management and budgeting skills, helping you manage your finances and rebuild your credit rating.

You can’t file on your own. Under the Bankruptcy and Insolvency Act, only a LIT can submit a consumer proposal in Canada. A debt consolidation firm or credit counsellor also cannot file a proposal for you.LITs are licensed by the government and understand both provincial and federal laws. They’re required to file a proposal properly so it’s legally-binding on you and your creditors.

When you file for bankruptcy, your creditors cannot take legal action against you. They can’t sue you, take money from your wages, or keep calling you to ask for payment.

In bankruptcy, you surrender your assets to the LIT for the general benefit of your creditors. However, you do not lose everything when you file a bankruptcy.There are exemptions, based on the province you live in. But, in most cases, you can usually keep these assets when filing bankruptcy in Canada:

•  A car, valued to a provincial limit
• Personal belongings and clothes
• Equipment related to work
• Furniture, food, and tools in your house
• Some types of agricultural property
• Any RRSPs, RRIFs, RESPs, RDSPs savings (except if they were made in the year before filing bankruptcy)

The bankruptcy process is designed to focus on rehabilitation not punishment. Each province and territory has its own exemptions to the bankruptcy law that outline which of your assets, and how much equity, you are allowed to retain.

Filing a bankruptcy is a legal process and cannot be done on your own. Bankruptcy can only be filed by a LIT.

When you file for personal bankruptcy, your credit score is affected for six years after you have been discharged. A note is placed on your credit report, which makes it hard to get a loan or to get credit at a lower interest rate.However, you can rebuild your credit by following good credit habits. This includes borrowing reasonable amounts and paying them back on time. Getting a secured credit card (a credit card that is backed by a deposit) can help you rebuild your credit score. Whether it’s the best time to declare personal bankruptcy or not, know that your financial life is not over once you file for personal bankruptcy. While there are certainly consequences, you can still rebuild your financial health.

Bankruptcy is not your only option. It’s used as a last resort when other solutions have been ruled out. In bankruptcy, you surrender most of your assets to the LIT for the general benefit of your creditors. Many people are surprised to learn that bankruptcy doesn't solve everything.

• Doesn’t erase all debts
• Involves using your assets
• Impacts your credit score
• Makes it harder to borrow again

A consumer proposal is a formal and legally-binding debt settlement agreement between you and the companies you owe money to (your creditors). It can reduce your debt by up to 80% forever–without any fees or interest charges.