After filing either a consumer proposal or bankruptcy, phone calls from creditors should be referred to your Licensed Insolvency Trustee ("LIT"). Generally if letters from creditors persist 4 to 6 weeks after filing, they should be referred to your LIT. Collection letters from any additional creditors for debts incurred prior to your filing but not on your original list of debts, should be referred to your LIT.
2) What assets am I able to keep?
In a consumer proposal, unless your consumer proposal states otherwise, your assets remain with you. In the event of a bankruptcy, your assets are assigned to your LIT. Some assets may be exempt from seizure. Your LIT can advise you specifically what asset(s) may be affected in a bankruptcy.
3) What if I am being sued or garnished?
The filing of a consumer proposal or bankruptcy stops all lawsuits and garnishments, with the exception of those relating to the collection of child or spousal support.
4) Will my name go in the paper?
A consumer proposal is not required to be published in a local newspaper. Most bankruptcies are filed as Summary Administration Estates and as such, are not required to be published in the newspaper.
5) Will I be able to re-establish my credit?
While you are in a consumer proposal or in bankruptcy you are restricted from obtaining credit. When your consumer proposal is fully performed and your bankruptcy is discharged, you can look into appropriate strategies to re-establishing your credit rating. Both a completed consumer proposal and a discharged bankruptcy will appear on your credit report for a period of time.
6) What if I have a co-signer on my loan?
Your consumer proposal or bankruptcy will only protect you and not a co-signer. If the co-signer is unable to pay their obligations, they may wish to seek their own advice on how to resolve their financial difficulties.
7) Will I have to go to Court?
Many individuals receive automatic discharges from bankruptcy without the need of appearing before the Court. Your LIT will be able to explain these rules and how they will apply to you.
8) Are there any debts not covered?
Yes. Section 178 of the Bankruptcy and Insolvency Act (“BIA”) outlines certain types of debts which are not dischargeable by a consumer proposal or bankruptcy. Your LIT will provide you with this information and answer any questions you have in this regard.
9) Can I include a debt to Canada Revenue Agency (“CRA”)?
Yes. However, if CRA has filed a lien on your property relating to your debt to them, your LIT will discuss the effect of this with you.
10) How do the LIT’s fees get paid?
In a consumer proposal and most bankruptcies, the LIT’s fees and disbursements are determined by a tariff or scale as set by the BIA Rules and are paid out of the Bankruptcy or Proposal Estate. Your LIT will discuss in detail what arrangements will be required to pay the administration costs.