Debt FAQs

Yes. You can get relief from income tax arrears. Even the Government of Canada is included in Consumer Proposals and Bankruptcies.

The creditor/lender will pursue the co-signer for the debt as they are equally liable with you, the primary signer.

You cannot pay a co-signer while you are going through a bankruptcy or proposal but once the process is completed you can pay the co-signer, if you wish.

Generally, if you are current with your car payments the lender will allow you to continue payments and retain the vehicle. If you fall behind in payments, you will run the risk of having the vehicle repossessed. If there is equity in your vehicle, if you file an Assignment in Bankruptcy you will have to repurchase the equity from the Trustee.

Similar to the situation with a car, if you are current with your mortgage payments the lender will allow you to continue paying your mortgage. However, if you file an Assignment in Bankruptcy and have equity in your house that is an asset that goes into the bankrupt estate and will need to be realized upon by the Trustee. For more information on this question you can come in and talk to someone at Caplan Debt Solutions.

MPI debts can also be included in any formal proceedings. There is a slight problem when MPI debts (Tire Loan Program) are included in your filing. MPI will no longer allow you to finance your insurance payments. That is, your full annual insurance premium will be due on the next insurance due date.

Under Section 178 of the Bankruptcy and Insolvency Act, certain debts cannot be discharged by filing. The main ones are:

Fines and penalties of the court (this includes speeding tickets and parking tickets)
Alimony and Maintenance
Support of separated family
Debts caused by fraud
Student loans that are less than seven years old

If you file an Assignment in Bankruptcy, you cannot sponsor anyone into the country while you are bankrupt. You may however sponsor someone into the country if you file a consumer proposal.

Some professional designations will be affected by filing for bankruptcy. A lawyer cannot maintain a trust account if they file an Assignment in Bankruptcy. Chartered Professional Accountants cannot maintain their designations if they file for bankruptcy. Insurance brokers cannot maintain their licenses if they file Assignments in Bankruptcy. The same restrictions are not in place on the filing of a proposal.

Yes. Creditors cannot continue collection activity after a filing including garnishments, collection letters and harassing phone calls.

On filing either Bankruptcy or a Consumer Proposal your credit rating will drop to R9, which is the lowest possible score. It can be rebuilt during and after filing by taking appropriate steps. debtcanada, › library › credit-rating-101 has information on credit scores and how to rebuild them.

Usually there is no impact on a spouse provided that they do not have supplementary credit cards or have jointly signed loans. In bankruptcy a spouse must report their income and surplus income requirements are based on total family income but the spouse is not required to make any part of the payment.

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