Your Legal Options Explained
Drowning In Debt? There Is Legal Help Available!
There are many options available to help you deal with an excessive debt load. These include avoiding Bankruptcy and keeping your assets, such as your home or car.
We are required by Federal law to explain all of your debt relief options to you.
It's good to know there are many options available to help you get out of debt. Bankruptcy is only one possibility …and it should be evaluated against all other options before you proceed with any sort of protection from your creditors.
Before you can decide which solution is the right one for you, it would be helpful for you to sit down with one of our trained administrators who can walk you through your custom R-Plan - it's designed to help you find the RIGHT solution for your debt problems. And the consultation is totally free of charge.
Legal Options For Debt Relief
(1) Consumer & Division One Proposals - A Settlement Offer That Works
Proposals are used by debtors who cannot meet their obligations but wish to make a settlement with their creditors and avoid bankruptcy. First, you work with a federally licensed Insolvency Trustee to determine how much you owe, how much you can afford to pay towards your debt each month, and how long it will take you to pay it off. Then the Insolvency Trustee submits your proposal to your creditors.
It’s all about breathing room. This agreement may allow you to pay off only a portion of your debts or extend the time you have to pay them off. A. Farber & Partners Inc. will prepare and present a formal proposal for you that is fair and reasonable to your creditors and also affordable for you. If the required majority of your creditors accept the offer, then all your unsecured creditors are obliged by law to also accept the offer.
Here's another benefit: Filing a Proposal immediately stops all collection efforts and legal actions by your creditors, including lawsuits, asset seizures, and wage garnishments, without having to file for bankruptcy. This type of debt relief is an excellent alternative to a personal bankruptcy filing.
Two Types of Proposals
There are two types of proposals. These are:
Division 1 ProposalThis is used mainly by small-to-medium-sized enterprises and consumers who owe more than $250,000 of debt. Creditors are asked to accept a portion of the full amount owed. Generally, the proposal is directed at ordinary unsecured creditors, while secured creditors are negotiated with individually. In larger, more complex proposals, classes of secured creditors are created to vote on the proposal. If the requisite creditors (50% in number and 66.66% in dollar value) agree and the court agrees, a debtor can restructure his or her balance sheet by reducing the debt.
Consumer Proposal.This is a simplified form of a proposal available only to individual debtors owing less than $250,000, excluding mortgages on the principal residence. An individual asks their creditors to accept a portion of the full amount owed. If more than 50% of your creditors agree and the court approves, the person can reduce their debt.
Fill out the form at the bottom of this page, and we'll call you back to answer all your questions about a Division 1 Proposal or Consumer Proposal, or to book a free, non-obligation debt relief consultation with one of our debt experts.
(2) Personal Bankruptcy: An Alternative To A Proposal
As an alternative to filing a Division 1 Proposal or Consumer Proposal, you can address your financial crisis by using your right to seek protection under the BIA (commonly referred to as “declaring bankruptcy”). Filing bankruptcy Toronto in Ontario is a relatively simple process. Your Licensed Insolvency Trustee handles all the legal requirements for you. This immediately stops all collection efforts and legal actions by your creditors, including lawsuits, asset seizures, and wage garnishments.
The personal bankruptcy process includes 2 mandatory debt-counseling sessions. These will help you create realistic budgets and regain control over your finances. While nobody wants to go bankrupt, this may be the most appropriate solution to bring closure to a difficult period in your life, and build a financially-secure future. It is also the most fair and honest way to deal respectfully with your creditors, when there are no other options left. If you feel that you just can't handle the multi-year time-frame of a consumer proposal, or feel you would struggle to make those payments to your creditors, you have the legal right to file for bankruptcy protection. Filing a personal bankruptcy in Toronto or at any of our other offices in Ontario or British Columbia is a very simple process. We will assist you with the entire procedure to get you out of debt.
Click here to request a free Debt Relief Consultation, or to speak with one of our experts to learn all about how a Consumer Proposal or even a Bankruptcy can help you to get out of debt.
Other Debt Relief Options
(3) Informal Settlement
This is a proposal made to creditors without the protection of the Bankruptcy and Insolvency Act. It is usually negotiated by insolvency professionals, as they are aware of all other possible options, and add credibility to the negotiations. While not as easy to negotiate, nor as successful, as a Consumer Proposal or Division 1 Proposal, an informal settlement, if successful, enables you to navigate through difficult times without a formal reorganization. In situations where informal settlement offers are not accepted, it allows creditors to pursue collection actions. The most common cause of failure happens when one creditor obtains a judgment against the debtor that renders the negotiated settlement with other creditors impossible to perform.
(4) Debt Repayment Plan
This is a type of Informal Settlement whereby we as a third party assist you in negotiations with creditors. This procedure usually requires that the full debt be repaid (over time), but stops interest from accumulating.
(5) Debt Negotiation
This process involves contacting some or all of your creditors to explain your financial situation, and suggesting an arrangement that is tailored for your circumstances. With assistance from debt professionals at A. Farber & Partners Inc., debt negotiation could, in some cases, be a viable alternative to bankruptcy, and could preserve your credit rating.
You should be aware
There are many unlicensed firms and individuals practicing as Credit Counselors. These firms pose obvious risks to both creditors and debtors. Unlike in a Division 1 or a Consumer Proposal under the Federal Bankruptcy and Insolvency Act (BIA), in a Credit Counseling settlement scheme the creditors can change their minds mid-stream or continue to take legal action (for example: garnishment, seizure of assets, etc..) against you.
Let a Licensed Trustee help you arrange the protection you have a legal right to!
If you feel you're ready to speak with us about your debt situation, please remember: we are required by law to discuss all of your debt relief options with you, including personal bankruptcy, a consumer proposal, but also other solutions, such as debt consolidation.
Let us help you find the right solution for your debt problems today.