Frequently Asked Questions

General FAQs

Q. How does it work, what are the steps?
Q. What are the warning signs that mean I need to do something?
Q. What Are My Options?
Q. Do I qualify to make a proposal or file for bankruptcy?
Q. What Debts Survive?
Q. How much does it cost for a Proposal or to file Bankruptcy?
Q. What happens to my credit rating?
Q. What are my next steps?

Q. How does it work, what are the steps?
 We work to keep things simple with four basic steps in the process.

  1. Complete the self-assessment worksheet (click here to download)
  2. We meet to discuss your situation, goals and options
  3. We develop an action plan, budget and timeline
  4. We put the plan into action and eliminate your debt

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Q. What are the warning signs that mean I need to do something?
 Collection agents are calling
 You are receiving past due notices
 You are receiving letters threatening legal action
 There are judgements against you
 Your wages are garnisheed
 You are only able to pay minimum balances on credit cards
 You are borrowing money from family or friends
 You are considering payday loans 
 Worrying about your finances is affecting your health, family or job 

If you are experiencing these warning signs you are not alone.  Thousands of Albertans face the same problems and live under the same pressures.  However, once you have recognized you may need help there is good news ... financial problems can be solved!

Q. What Are My Options?
 There are several ways to move forward on eliminating debt.

You can set up:

  • Non-legislative methods (ie. applying for a bank consolidation loan, informal arrangements)
  • An orderly payment of debts program
  • A proposal to your creditors under the Bankruptcy and Insolvency Act, and finally,
  • An assignment in bankruptcy

Non-Legislative Methods

You attempt to make arrangements with creditors by applying for a consolidation loan at a bank or by arranging private agreements with each creditor to satisfy your obligations.  However, you have no formal protection from creditors taking action against you. 

Orderly Payments of Debt

"OPD" is a program offered by Credit Counselling Services of Alberta Ltd. whereby you repay all your debts in full over a period of time.  Interest is fixed by legislation at 5%.  Most creditors are restricted from taking further collection action or proceedings against you. ("Stay of Proceedings") 

Proposals

A Proposal under the Bankruptcy and Insolvency Act, filed through a Trustee's office, allows you to offer a form of settlement to your creditors.  The terms of your Proposal may include a reduction of debt, an extension of the repayment terms or both.  

Key aspects of a Proposal are:

  • Most creditors are subject to a Stay of Proceedings;
  • Creditors vote on whether they agree with the terms of your Proposal;
  • Proposals generally provide for a monthly payment to the Trustee for distribution to your creditors every few months;
  • A Proposal must usually offer creditors more than they would otherwise receive if you were to make an assignment in bankruptcy;
  • Income tax liabilities to Canada Revenue Agency can be included in your Proposal;
  • Once you satisfy the terms of your Proposal, you have no further obligations with respect to the debts included in the Proposal; and
  • A Proposal generally will not interfere with the rights of secured creditors (ie. mortgage, vehicle lease).
A Proposal is well suited if you are not able to satisfy all your obligations, but have an ability to make some payments. 

Assignment in Bankruptcy

If the preceding alternatives do not represent viable options for you, then filing an assignment in bankruptcy through a Trustee's  office will provide you with protection from your creditors and immediate relief from most legal actions.  

Key aspects of a bankruptcy proceeding are:

  • Assets that are not exempt will be liquidated by the Trustee for the general benefit of your creditors;
  • You must submit a monthly statement of your income and expenses to the Trustee;
  • You must attend two financial counselling sessions;
  • In limited circumstances, you may be required to attend a meeting of your creditors or meet with a representative of the Superintendent of Bankruptcy;
  • If it is your first bankruptcy, you may be automatically discharged from bankruptcy in just nine months, if you comply with your duties and there are no objections;
  • Once you receive your discharge you will have no further obligations to most creditors.

Q. Do I qualify to make a proposal or file for bankruptcy?

 To make a Proposal or file for bankruptcy, you must meet the following criteria;

  • Owe at least $1,000; and
  • You are unable to or have ceased paying your debts as they become due; or
  • You have insufficient assets to pay all your debts.

Q. What Debts Survive?
 Certain debts are not eliminated whether you make a Proposal or file for bankruptcy.   

These include:

  • Court imposed fines, penalties or restitution orders;
  • Alimony, maintenance and support payments;
  • Debts incurred out of fraud, embezzlement or misappropriation; and
  • Possibly student loans, depending on the number of years since leaving school.

Also, secured creditors with properly documented and registered security are not affected, however, most secured creditors will allow you to maintain the asset and continue payments, provided your payments are current.  Co-signors or guarantors are still responsible for obligations if you make a Proposal or file for bankruptcy. 

Exempt Assets

The Bankruptcy and Insolvency Act and the Civil Enforcement Act of Alberta allow an individual to keep certain assets even in the event of a bankruptcy. 

These include:

  • Necessary clothing with a liquidation value of up to $4,000;
  • Household furniture and appliances with a liquidation value up to $4,000;
  • Tools of the trade used to earn an income with a liquidation value up to $10,000;
  • One motor vehicle with equity not exceeding $5,000;
  • Up to $40,000 equity in your principal residence or your pro-rata share thereof;
  • Medical and dental aids;
  • Certain pensions, RRSPs and life insurance policies; and
  • Certain special exemptions for farmers.

Q. How much does it cost for a Proposal or to file Bankruptcy?

 The fees for a Proposal will generally be paid from the funds you pay into your Proposal.

 The Trustee's fees and expenses for a bankruptcy are paid from:
  • Monthly payments to the Trustee;
  • Non-exempt assets liquidated by the Trustee; or
  • Income tax refunds paid into the bankrupt estate.

Q. What happens to my credit rating?
 The majority of the people who visit us already have a poor credit rating.  Your credit rating can only improve after successfully completing a Proposal or being discharged from bankruptcy. 

Q. What are my next steps? 
 We would be pleased to meet with you to discuss your specific circumstances and provide a more detailed analysis of the options available to you.   

Let us help you find success.  Call us today at (403)252-1766 to make an appointment for a free initial consultation.