When you are deep in debt, it can be difficult to get out of the hole and get your financial situation back on track. People who lack proper financial planning and support often end up struggling with mountains of debt and are forced to eventually file for bankruptcy. You can avoid this if you get advice from an expert in debt management. In Canada, you can get assistance from a Licensed Insolvency Trustee (LIT).
11. What’s The Difference Between LIT’s And Other Debt Relief Companies?
The government wants you to recover from debt and be in a financially stable position. Legal protection under the Bankruptcy and Insolvency Act ensures people in debt get fair and legal advice. In an effort to ensure individuals and lending institutions get a fair deal, the government provides assistance in the form of a Licensed Insolvency Trustee or LIT.
They were formerly known as Trustees of Bankruptcy, but as they handle both bankruptcies and consumer proposals, that title was inadequate. The LIT’s are government licensed professionals who offer advice on resolving debt problems. They’re licensed by the Superintendent of Bankruptcy and are the only group of professionals who can administer bankruptcies or consumer proposals.
Other debt relief companies and professionals can offer advice as well, but they can’t administer the proposal or file a bankruptcy for you. While LIT’s undergo comprehensive training and must pass three levels of examinations, regular debt relief agents aren’t so well trained nor are they licensed under the Bankruptcy and Insolvency Act.
LIT’s are also mandated by the government to provide fair and unbiased advice; you can’t be certain a debt relief agent will do the same. If you’re in a debt crises, it’s a good idea to approach a licensed professional instead of a debt relief company.
12. What happens if I cannot keep up with my proposal payments due to continued hardship?
Consumer proposals are an attractive option to people in debt because they can retain their property and don’t have to pay high monthly installments to resolve their debt. Unfortunately, some individuals may still struggle to make the consumer proposal payments on time and consistently. There are two options available to you if you can’t make your payments:
- Renegotiation – You can renegotiate the monthly payments and reduce your financial burden. If you find that you can’t make the repayments, simply contact your LIT immediately and explain the situation to them. They will renegotiate on your behalf. Bear in mind that lenders aren’t obligated to accept your new proposal, but experience shows this is usually not a problem.
- Bankruptcy – If you really can’t meet the payments, you should consider filing for bankruptcy. That might be the only safe alternative for you, especially if you can’t make the payments under the consumer proposal.
13. I’ve heard about mandatory credit counselling, what’s involved?
Mandatory credit counselling will help you determine how to manage your finances and make the monthly consumer proposal payments. The LIT will assess your current financial situation, consider your spending habits, take note of your debt amount, and come up with solutions. This debt management plan will help you remain financially stable during the repayment period.
You need to attend two mandatory credit counselling sessions after your consumer proposal is approved and accepted. With the LIT’s help, you can come up with a plan to comfortably pay the installments on time and still maintain a good lifestyle outside your debt.
14. Can my student loan be included in a Consumer Proposal?
Yes, you can include your OSAP student loan in your consumer proposal but only if you have been out of school for more than seven years. If you have been out of school for less than 7 years, you might still be able to apply for a consumer proposal but the student loan would still have to be paid in full. If your student loan was issued by a bank you can include it with no problems along your other unsecured debt. If you have a government student loan you should get advice from an LIT.
15. I’m in collections right now, will the calls stop?
Yes, once you begin working with a LIT they will handle the collection companies and when the consumer proposal is filed your legal protection begins and creditors will no longer be allowed to contact you directly.
I’m ready to get started, how long does the actual filing process take?
Upon consulting with a LIT you will discuss your options and come up with a suitable solution for you. The process to prepare the consumer proposal documents for filing can be done quite quickly. When the consumer proposal is filed with the government and sent out to your creditors, they have 45 days to respond to your settlement offer. After they approve the consumer proposal and a further 15 days elapse, the consumer proposal becomes court approved and is now in full force. The creditors can’t contact you or expect you to pay the installments once the consumer proposal is filed.
If you have more questions about consumer proposals and LIT’s, we encourage you to contact us at Brief Trustee. We’ll offer honest and unbiased advice on your situation.
Freedom from debt is possible. Take the first step today, call us.