In a healthy and manageable amount, debt and credit are important components to a good financial profile. In order to establish good credit, which is essential in obtaining a mortgage or loan, you need to prove your ability to regularly meet your payments. But there is a negative side to debt that can emerge as a result of high interest rates, a medical emergency, separation, or sudden change in employment.
Serious debt can have a negative effect on one’s personal health and well-being. The stress can cause loss of sleep and consistent anxiety, especially if you are being contacted constantly by collections agencies or your wages are being garnished. So how do you know if you have to file for bankruptcy? How do you know when a consumer proposal is right for you or your business?
Are You Considering Bankruptcy?
Like the consumer proposal, bankruptcy is meant to be a form of debt relief that allows the debtor to get back on track eventually. It is not a punitive process, it is simply the steps one might have to take in order to get out of debt in the long run as a way to eventually achieve long-term financial goals.
You will be working closely with your bankruptcy trustee on your path out of insolvency, so be sure you find someone professional and compassionate like the Licensed Insolvency Trustees at the Toronto-based firm David Sklar & Associates.
The Steps to Debt Relief
Contact a bankruptcy trustee in order to address your debt issues and strategize a plan for how you are going to tackle it. After all, it is the Licensed Insolvency Trustee who will file for bankruptcy or file the consumer proposal on your behalf, so they can be the ones to help you assess your options.
In the case of wage garnishment, filing a consumer proposal puts an immediate end to wage garnishment which can allow the individual to catch their breath a little bit as they stabilize their plan for debt repayment. It is within the legal rights of an unsecured creditor to garnish your wages once they have secured a seizure summons.
With such a summons, the creditor is entitled to garnish up to 30 percent of your wages, which can be a serious blow to those already struggling to make bill payments on time. As soon as you file a consumer proposal, any legal action your creditors are taking towards you are put to a halt. No more collection calls, no more wage garnishment.
What does the process actually look like? Filing a consumer proposal starts with meeting a Licensed Insolvency Trustee. From there you evaluate your options, prepare the proposal, and your bankruptcy trustee will file the proposal. Creditors who hold at least 25 per cent of your debt are entitled to request a meeting, though this step is not mandatory. Once your creditors accept your proposal, you pay your trustee and attend credit counselling sessions to help you budget and manage your finances.
You can recover from debt through a consumer proposal. If you are looking for a way out of difficult debt, then contact an LIT and get ready for a rewarding life after a consumer proposal.
