Some life situations do call for you to file for bankruptcy. However, before you embark on this mentally draining process, you might want to consider registering for a consumer proposal.
The consumer proposal is a legal process that will enable you to negotiate with your creditors to allow you to pay off what you owe either at a lower rate or for a more extended period. It’s usually administered by a licensed insolvency trustee (LIT), who will pay the money you provide on your behalf to the creditors.
While it can be tempting to opt for bankruptcy still, bear in mind that certain debts cannot be discharged this way. These debts include:
1. Secured loans
One of the first things you should think about before attempting to discharge your debts through bankruptcy is whether your loans qualify. Secured loans, which use collateral, cannot be discharged through the bankruptcy process. These include car loans and mortgages.
The average cost of buying a home in North Bay, Ontario, now stands at $ 232,500. On the other hand, the average car loan payment will cost you $549 each month. If you owe lots of money on your home and car, paying them off can prove to be complicated. But with no bankruptcy relief in sight, you would have no choice but to renegotiate with your creditors.
2. Student loans
Do you have student loans? Are they less than seven years old? Know that you are not alone. Research shows that, on average, Ontario residents hold about $ 18,784 in student loan debts. The numbers are likely to balloon if you fail to pay them off in time. Unfortunately, you cannot file for bankruptcy to get rid of them. You must pay them off one way or the other.
So no matter how bad you feel, you need to find a way around your student loan debts. And the consumer proposal might be the best way to go about having them reduced or having your payment period extended. Certain circumstances enable you to have your student loans discharged through bankruptcy.
If your loan is between 5-7 years old, your trustee might be able to make a hardship bankruptcy application. But there is still no guarantee that these loans will be discharged.
3. Court-ordered payments
When the courts order you to make certain kinds of fees to another party, those payments cannot be discharged through bankruptcy. If you have a child and have been ordered to pay child support, then you need to find a way to do that. Even if you are in arrears, you cannot get away with not paying for your child.
Additionally, if you owe your ex money in the form of alimony or spousal support, you need to find the money to pay it off. Also, restitution payments and fines that you have been ordered to pay cannot be written off through bankruptcy.
Before you go about trying to discharge your debts through bankruptcy, it would be prudent for you to determine if they are dischargeable in the first place. If you come across as someone who is trying to escape your financial responsibilities, you can end up in more significant legal trouble than you anticipated.
For that reason, take the time to find the best LIT available in North Bay and discuss all your options. The consumer proposal that your trustee makes on your behalf can be the solution you need to avoid bankruptcy and salvage your reputation despite your debts.