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Your options

Find a Licensed Insolvency Trustee

If you are considering bankruptcy, your first step should be to meet with a Licensed Insolvency Trustee (LIT). LITs are individuals licensed by the Office of the Superintendent of Bankruptcy (OSB) to administer the bankruptcy process. The LIT will evaluate your financial situation and discuss various alternatives that could help you to solve your financial problems.


Find the right debt solution

You have money problems? Learn how to find the right debt solution.

Informal measures

If you feel your financial situation is out of control, there are steps toward greater financial stability that you can take today.

Consumer proposal

A consumer proposal is a formal procedure governed by the Bankruptcy and Insolvency Act and is available to individuals whose total debts do not exceed $250,000, not including debts secured by their principal residence. With a consumer proposal, you work with a Licensed Insolvency Trustee (LIT) to put together an offer. This offer can be to pay your creditors a percentage of what you owe them over a specific period of time, to extend the time you have to pay off the debt, or a combination of both. Payments are made through the LIT, and the LIT uses that money to pay each of your creditors. Compared with the Division I proposal (see below), a consumer proposal is a simplified process and is available to individuals only.

The advantages of a consumer proposal are that you retain all of your assets, actions against you by unsecured creditors (such as wage garnishments) are stopped and you can solve your money problems without declaring bankruptcy.

Division I proposal

A Division I proposal is a formal procedure governed by the Bankruptcy and Insolvency Act that is available to both businesses and individuals and there is no limit in terms of how much money is owed. As with the consumer proposal, you work with an LIT in bankruptcy to put together an offer to either pay your creditors a percentage of what you owe them over a specific period of time, or to extend the time you have to pay off the debt, or a combination of both. Payments are made through the LIT, and the LIT uses that money to pay each of your creditors.

The advantages of a Division I proposal are that you retain all of your assets, actions against you by unsecured creditors (such as wage garnishments) are stopped and you can solve your money problems without having to declare bankruptcy.

Bankruptcy

Bankruptcy is a formal procedure governed by the Bankruptcy and Insolvency Act. With bankruptcy, you sign over all of your assets to an LIT, except those exempt by law. The LIT will then sell or otherwise use them (e.g., transfer them) to pay your creditors. Once you have been declared bankrupt, actions against you by unsecured creditors, such as wage garnishments, are stopped.

The Companies' Creditors Arrangement Act

The Companies’ Creditors Arrangement Act (CCAA) is a federal law allowing insolvent corporations that owe their creditors in excess of $5 million to restructure their business and financial affairs. Under the CCAA, corporations ask the court for protection while they prepare an offer to creditors for some form of payment (called a Plan of Compromise or a Plan of Arrangement). CCAA proceedings are carried out under the supervision of the court.

The benefit of this option is that debtor companies are able to continue operating and receive protection from creditors while the Plan of Arrangement is being prepared. Creditors then have the opportunity to vote on whether or not to accept the offer.

Consolidation order (Alberta and Nova Scotia)

If you are a resident of Alberta or Nova Scotia, you can voluntarily seek out a legal proceeding called a consolidation order (also known as an orderly payment of debt) to help you make your payments. With a consolidation order, the provincial court combines all your debts into one and determines the amount that you must pay to the court periodically. The court will then ensure that payments are made to your creditors on your behalf.

Voluntary Deposit Service (Quebec only)

If you are a resident of Quebec, you can register at the nearest courthouse for the province’s Voluntary Deposit Service.

Under this program, you deposit money with the court monthly. The size of these payments is based on your income and number of dependents. The court then distributes the money to your creditors.

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