Filing for bankruptcy in Canada does not have to directly affect your spouse’s credit, but there are some exceptions.

Most people have the belief that the fact that you are married or are living common law the partner will be automatically responsible for your debts. This is not true. The debts you incur are yours not your partners. No one else is responsible for the money you owe.

A collection agency will sometimes try to make you believe that if you don’t pay up they will go after your spouse for the money. The truth is that they can’t, but the threat of doing so motivates people to pay. It is simply a bluff.

Here is the problem. Often times both the husband and wife will sign for a loan. This happens all the time. Let’s say the husband wants to buy a boat and it has been agreed that he will pay for it from his own income but the lender wants his spouse to sign as well. This may not be necessary to get the loan but the lender asks for it anyway, wanting all the insurance he can get.

The same thing happens when a couple gets a credit card. Even though it’s only going to be the one person using it, the bank will try to get both signatures if they can.

In both of these instances both parties are responsible for the debt, even if the two are not together anymore. If the one doesn’t pay, the other one will have to. It sucks but it’s the law.

Remember, your spouse is liable for the debt, not because they are your spouse, but because they have signed for the debt.

On the other hand if all of the debts are in just one of the couples name then it doesn’t matter whether you are married or not. Only the person who has signed for the credit is responsible for the money owed.

The bankruptcy in this case will only affect the one spouse. The other spouse does not have to declare bankruptcy because they are not responsible for the money their partner cannot pay back.

These issues are complicated. It is often difficult to determine if a credit card is a joint card, or just a supplementary card.

If you are considering filing for bankruptcy in Ottawa then why not give Jean Lazard a call. He understands what you are going through and can help!

Did you know that in the first 9 months of 2010 there were over 37,000 people in Ontario alone that filed for personal bankruptcy. That’s quite a number! If we look at the number of people who filed Consumer Proposals in the same year we would find the number exceeds 22,000, which by the way, is an increase of over 15% from the previous year.

Filing for personal bankruptcy is not a “do it yourself” thing. As this is a complicated legal matter with a number of debtors involved and certain laws and procedures that need to be followed, a bankruptcy trustee must be appointed to handle your file.

Personal Bankruptcy – Steps you need to take!

Step # 1.

Contact Jean or another bankruptcy trustee here in Ottawa and make an appointment.

Step # 2.

Get everything together. Make a complete list of all the people/companies you owe money to and the amount you owe them. Don’t leave anything out! This is not a situation where you get to decide who you can pay and who you can’t pay. Write down all your sources of income and the amounts you make every month so the trustee can have an accurate picture of your finances. Make a list of any assets you may have.

Step # 3.

With the help of the bankruptcy trustee decide whether or not filing is the best way forward for you. The trustee will explore other avenues with you. He or she might advise you to handle your current debt by showing you how to budget properly or make a Consumer Proposal to your creditors.

Step # 4.

If you have no other real choice than to declare personal bankruptcy then do it as quickly as possible so that you can start getting your life back in order and move on.

Step # 5.

You will be required to attend two credit counselling sessions before you will get discharged from bankruptcy in Ontario. At these sessions you will discuss budgeting, and ways to re-build your credit when the bankruptcy is finished. These counselling sessions can be very helpful.

In conclusion, once the process is started, all the legal requirements for the actual filing for personal bankruptcy in Ontario will be looked after by the bankruptcy trustee. All you need to do is follow the simple instruction the trustee will give you and they handle the rest.

Equifax and Trans Union are the two largest credit bureaus in Canada, Equifax. Equifax keeps the record of your consumer proposal on its records for 3 years after your very last payment on your current debts and 6 years from the date of discharge after filing for personal bankruptcy. If this is your second bankruptcy, they will keep it on your record for 14 years.

Trans Union states on their web site that they keep a bankruptcy record on your credit file for six to seven years from the date of discharge or fourteen years from the filing date (depending on provincial legislation).

Your Credit Score after Personal Bankruptcy

Once you have declared personal bankruptcy or made a consumer proposal you are given the lowest possible credit score. This makes sense. The only difference is, as I have mentioned, a consumer proposal doesn’t stay on your record as long.

Something that you are going to want to do is send a copy of your discharge to both Trans Union and Equifax to ensure your credit records are up to date and keep all the documents you have regarding your personal bankruptcy or consumer proposal for reference by future lenders.

How Soon Can I Get Credit Again?

This does not mean you can’t get credit or even a credit card. Once your discharge has been granted you will get solicited by, for example, MasterCard for a limited credit amount usually with an upfront deposit on your part of around $500. The deal here is that they are going to charge you a high rate of interest because of your poor credit history. From the standpoint of rebuilding your credit, it is a smart thing to do at any interest rate because of the long term benefits of building up your credit score.

In conclusion you will be able to start to rebuild your credit as soon as your discharge comes through, so bankruptcy isn’t the end of the world in term of your access to lenders. As part of your bankruptcy process, the trustee’s office will give you some helpful tips on rebuilding your credit after personal bankruptcy.

Overwhelming debt can beat down a person, cause depression, even suicide. It causes strife in families, strain relationships and causes isolation. Consider the state of a family who may have had a job loss in the family. Through no fault of their own have found themselves with little or no income leaving them scraping to keep a roof over there heads and food on the table. The phone is constantly ringing at all hours from various collection agents demanding money that simply isn’t there.

Personal Bankruptcy Can Bring Tremendous Relief

The foremost feeling of most people, when they finally file for personal bankruptcy, is one of relief and release. They feel as if a huge weight has been lifted from their shoulders. In many cases they feel they have a “new lease on life”, a brand new start.

When families get back on their financial and emotional feet the constant arguments over money are reduced to minimum, relationships at home improve and the preoccupation around finances is replaced with a return to the simple pleasures of family life.There is new hope and valuable lessons learned. Often times, after a bankruptcy, there is a little extra money freed up because the money that was used to make the minimum payments on the credit card etc is no longer required to pay off debt and can be used for other things, quite possibly savings, the occasional meal out etc.

There are lots of down sides to personal bankruptcy but on balance the freedom people experience is worth it. It can be a blessing in disguise. It goes without saying that if you are thinking about bankruptcy you need to speak with a Bankruptcy Trustee in your area to find out exactly what your options are.

Even though their job is to represent the creditors in the sale and distribution of assets to creditors, the trustee also insures the debtor’s rights are respected under the law.

In terms of services to the various debtors, the bankruptcy trustee can help negotiate settlement agreements with the creditors, making any necessary arrangements, provide debt counselling or help you avoid bankruptcy by making a formal proposal negotiate new terms and conditions on monies owed.

What does a bankruptcy trustee do?

Basically the trustee has two main functions. The first is to determine what assets are available to him under the law This means you have to disclose all your assets, cars homes, jewellery, collectables, stocks, bonds, and investment portfolios etc. The trustee will then determine what is to be sold and what you may keep. The trustee determines what the assets are sold for and to whom.

Secondly, the bankruptcy trustee will disburse the money from the sale of the assets (if any) to your various creditors. Once the trustee gets involved you as a debtor have no say in the matter in terms of who gets paid what.

There are lots of Ottawa bankruptcy trustees to choose from. There are directories on line that will list all the trustees in the Ottawa area as well as the yellow pages. As a consumer it is wise to educate yourself on how to choose a good trustee. You will find a category on this site that deals with the does and don’ts.

Bankruptcy Exemptions – What You Can Keep:

1. The creditors can’t take your ordinary clothing items that we all use day in and day out. If you have a collection of furs or Gucci hand bags then you can expect they will not be exempt and will be taken and sold to pay off your creditors.

2. Your house hold items are protected including furniture, utensils, etc. Unless you have valuable antiques or paintings you will probably be left with what you have. Again there are limits to what you can keep. The bankruptcy trustee will make those decisions.

3. If you have tools for work that are unsecured you can keep them according to the rules that are laid out in the act.

4. If you are a farmer you are allowed to keep a higher value of tools. You also can keep seed that you may have for planting crops. Again you need to clarify this with a trustee.

6. In most cases your motor vehicles will be protected if used for work and has a value under $5,000.

7. Your RRSP’s, RRIF’s and DPSP’s will be protected with the exception of those contributions made during the previous 12 months. This is another area that you need to consult a Bankruptcy \trustee about. Rules change and they will know what is currently correct.

Basically the bankruptcy exemptions are there to protect you and your family members from creditors taking the fundamental basics a family would normally need to live.

Ottawa Bankruptcy or Debt Counselling

If you are looking in Ottawa for a bankruptcy trustee that provides debt counselling then you’ve come to the right place. Jean Lazard has been in business for years and is a qualified Bankruptcy Trustee and Debt Counselor who understands what you are going through. If can’t handle the debt payments are finding it a bit overwhelming then you need to talk to a professional who cares.

Often times it is a person’s inability to create and stick to a budget that has gotten them into financial trouble in the first place. They simply don’t have the skill or ability to handle their financial affairs and need help to do so. Having a plan, in and of its self, can be very beneficial coupled with some accountability can often avert financial disaster.

If you are way beyond a simple budgeting problem in your present circumstance a debt counsellor may suggest either a consumer proposal or personal bankruptcy.

One of the real benefits of seeking debt counselling is that, by taking this action, you are moving one step closer to a solution. This step in and of its self can relieve some of the stress and anxiety associated with being over your head in debt.

A bankruptcy and debt counsellor can be objective. Not being emotionally involved in the situation, a counsellor can separate fact from emotion and can clarify and identify what actions need to be taken that will produce a solution to your debt problems.

What about using another Ottawa Debt Counselling Services?

Using a debt counselling service that has no attachment or is not a bankruptcy trustee will not give you a balanced approach that is needed to create the right financial solution for your particular circumstance. You want to speak with someone who is an expert in all sides of the solution equation. Think about it for a moment. A stand alone credit counsellor can give you good credit advise about you’re your situation but can’t advise you properly about declaring personal bankruptcy because he or she is not qualified to do so. Bankruptcy trustees and debt councillors can do both.

The last thing to consider looking for an Ottawa bankruptcy and credit counselling service are the fees they charge. Unlike the independent Ottawa credit counsellors who can charge you anything they want, a bankruptcy trustees has a set schedule of fees laid out by the government so you have no worries about being charged too much.

Consumer Proposal

Simply put there are provisions under the Bankruptcy and Insolvency Act that make it possible, under certain circumstances, for someone to re negotiate the terms and conditions governing the repayment of debt. There are some rules around who can do this and some rules regarding eligibility.

Who are Consumer Proposals for?

Generally speaking Consumer Proposals are for people who have a good, secure employment situation but you have gotten way over you head in debt. You are sinking deeper and deeper into debt and simply can’t afford to continue without some financial relief. You have money to pay each month and are willing to due so but can no longer afford the payment. You don’t want to lose what assets you have left and are forced to consider bankruptcy and are looking for options.

Some Advantages of a Consumer Proposal

Some of the advantages of a consumer proposal are that you can negotiate to repay only a portion of the debt you owe and the interest on those debts stop growing. If you have collection agencies calling you all the time – they will have to stop. You can renegotiate all your credit card debt, bank loans and back taxes. Your won’t loose your home or other assets you may have and the new repayment plan can’t exceed 5 years so there will be a light at the end of the tunnel. You credit rating will be damaged but not as much as if you declared bankruptcy.

Creditors don’t have to accept a consumer proposal but generally speaking it better for them if you don’t go into bankruptcy. It’s better because nine times out of ten they are going to get more of their money back so in most cases a creditor will not appose the plan.

What a consumer proposal does not allow you to do.

You cannot pick and choose who you will pay and how much. If you are trying to avoid alimony or child support a consumer proposal will not relieve you of these responsibilities. There are some debts that can’t be renegotiated; your mortgage is an example.

Finally, there is a lot more to learn about consumer proposals as you might well imagine, the wise thing to do is contact a bankruptcy trustee in your area and get the information you need to move forward.

Wage Garnishment (garnisheed) – What Can I Do?

Have your wages been garinshed or garnisheed? Has someone threatened you with wage garnishment? To have a court order giving someone the right to your pay check is not a good thing under any circumstance, but it happens all the time. Having this happen to you can be a terrible shock to say the very least, so what can you do?

First of all you need to understand what has happened or what can happen.

What is wage garnishment?

Wage garnishment is a court order telling your employer that he has to pay the creditor who applied for such an order to be paid a certain amount of money from your wages. If the employer fails to do so he will be subject to penalties and fines. So don’t blame the employer, their hands are tied.

Why a garnishee happens

Your creditor is believed to have tried and exhausted other means of collecting the debt and has decided to sue you asking the court to garnish your wages. Once they have been granted a Garnishment Order they simply take it to your employer who is compelled by law to obey the order. The two situations where a court order isn’t necessary are if you owe back taxes to the CRA or if you have given consent or an assignment of wages to your credit union.

How much money are they allowed to take?

The court makes the final decision as to how much will be taken or even if any should be taken at all. Just because a creditor wants to garnish your wage, it doesn’t mean the court will order it.

How can I stop the garnishment?

There are only four ways you can stop a wage garnishment. First you ask them to take it off and make arrangements to pay them. This usually doesn’t work because they have already been down that road. Second you pay off the debt. Thirdly you can file a Consumer Proposal. Fourthly you can file for Personal Bankruptcy. Those are your options. If the creditor has not yet gotten the wage garnishment but is threatening to then it is wise that you do everything you can to prevent it from happening. This will save you the embarrassment and the damage to your credit.