The Basics
What is an exemption? hint: relates to assets
Assets (or part of an asset) protected from creditors. No creditors can take these assets
What is a consumer proposal?
This legal process allows individuals to settle their debts for less than the full amount owed, often without having to file for bankruptcy.
What affects the length of a bankruptcy? (2 points)
Yes
1x: 9 months or 21 with 'surplus income'
2x: 24 months or 36 with 'surplus income'
3x or more: court decides
Can CRA debt be included in a proposal?
- yes
Name 3 exempt assets
- RESP
- RRSP
- RDSPs *holla Kerry Lynne!*
- Household goods and personal effects
- Car
- House
- Tools for Work
True
What is bankruptcy?
- stay of proceedings
- re-balance things with your creditors by making payments based on your ability to pay (non-exempt assets and surplus income)
- A process of review
What happens to your a co-borrower when you file a bankruptcy or a proposal?
If someone co-signs a loan with you, they are still be responsible for the full balance of the debt.
The next day.
You can start rebuilding your credit the very next day. Your credit rebuilding will be limited until you complete the bankruptcy/proposal.
Does the court have to approve a consumer proposal?
No. But the court must approve Division I Proposals.
What are key differences between a bankruptcy and a proposal?
- Assets vest in a bankruptcy
- The amount you pay can change in a bankruptcy based on your income and non-exempt assets
- bankruptcy has a minimum term but can last as long it takes to complete the bankruptcy duties
Are all debts discharged by a bankruptcy?
No. Certain debts, like child support, alimony, and student loans under 7 years old, are not discharged in a bankruptcy.
Will your spouse be impacted by your bankuptcy or proposal?
No.
Your spouse’s credit and assets are not directly affected by your bankruptcy.
What is the standard length of time for a consumer proposal?
- whatever you decide
- lump sum payments vs. monthly payments
- payments can be made in advance without penalty
What are the duties a bankrupt must complete?
- 2 counselling sessions
- pay monthly payments
- provide the Trustee with their tax information
- complete monthly income and expense statements for the period of the bankruptcy
How can creditors participate in the bankruptcy process?
- they can attend a meeting of creditors
- they can appoint an inspector to review the bankruptcy
- they can object to the discharge of a bankrupt