Debt Relief or Bankruptcy in Toronto: Which Service is better?
Many people have filed for Toronto bankruptcy in the recent past. This was in the wake of the financial recession that Canadians are only just recovering from. However, bankruptcy is not usually the easiest way out of debt. The process is usually perversely expensive, complicated and tough. Here’s how Toronto bankruptcy is affected, the implications of the process and what you should know about bankruptcy in general: The overall number of insolvencies (including consumer proposals and bankruptcies) has been on the rise. Canadians also face a hike in the rates of interest on loans, debts and credit card facilities. This places most people at certain risk of the harsh reality that is insolvency.
Once you start managing your own finances, you should always watch out for signs of coming financial crisis including consumer insolvency. Basically speaking, this is legally defined as having assets that are insufficient to cover your debt. The debt may include unpaid income and property taxes, delinquent loans and certain harassment coming from collection agents. Serious difficulties are often triggered by divorce, serious illness or job loss.
Best Debt Relief options in Toronto, Ontario:
You can avoid bankruptcy in Toronto by pleading with your creditors through your Toronto bankruptcy lawyers. The lawyers will negotiate certain beneficial private arrangements on your behalf that can give you some options for debt relief in Ontario.
Filing Consumer Proposals
More formally, you can also file a proper consumer proposal. It has serious implications, mostly because you may be forced to declare bankruptcy unless the creditors accept the proposal. In case the creditors reject the proposal and Toronto bankruptcy is unavoidable, then the process starts with the filing and legal proceedings. This bars the creditors from collecting their debt.
This is the next major step in the Toronto bankruptcy process. Here, the assets are assigned to the bankruptcy trustee, who then distributes them among the creditors.
Next, mandatory counselling follows. When you declare bankruptcy, you will receive counselling on the management of financial affairs.
In case all the requirements are met, then you may be discharged automatically from bankruptcy 9 months after you declared. This usually happens for first- time bankrupts who did not report their surplus income. At this stage, you will be discharged from having to repay all your eligible debt. This way, you will be free from all eligible liabilities, including payday advances, certain tax obligations, personal loans, credit card balances among others. However, some debts cannot be removed when you declare bankruptcy in Toronto. These include spousal and child support, student loans, court- ordered restitution payments and fines.
The Toronto Bankruptcy Process
Bankruptcy begins when, as an insolvent individual, you retain licensed trustee. This is a statutory requirement. The law requires that you provide a disclosure of assets and liabilities, under oath. The disclosure should include all the assets that you disposed of, especially in the year just before you filed for bankruptcy in Toronto. As a debtor, you may also be required to surrender your credit cards, release copies of your payslips and any other proof of income and reveal income sources to the trustee.
The trustee will calculate any surplus income, which should then be earmarked for use in repaying the debt. Luckily, Toronto bankruptcy rules will allow you to retain enough of your income to live on. However, they require that you spend a minimum of half of your surplus income on repaying creditors. Insolvent individuals with a surplus income of over $ 200 per month will remain bankrupt. Also, in case the tax debt is over $ 200,000 which accounts for over 75 % of the total debt, then there will be no automatic discharge. To end bankruptcy, a court hearing is usually common.
To ensure you make the most out of the Toronto bankruptcy process, ensure that you demonstrate that you have learned from your financial mistakes. Otherwise, the automatic discharge may be pulled off the works. In some cases, Toronto bankruptcy courts have been known to impose certain conditions which the debtor has to meet before a discharge is issued. Courts are also empowered to refuse a discharge, although this is a rare occurrence. Overall, the more you know about the Toronto debt relief or bankruptcy process, the better it will be for you. To protect your interests and safeguard your future financial worth, consider talking to a Toronto bankruptcy trustees, lawyers today.