Declaring bankruptcy in Lethbridge is not the only way to get legal protection against your creditors. Most Canadians have a deep-seated fear of bankruptcy and refuse to consider it as anything other than as a last resort. As a result, they fail to research our bankruptcy laws to see what exactly is involved in a bankruptcy filing and how it might affect their personal financial situation.
Were they to spend some time searching the Internet, they might end up on the website of the Office of the Superintendent of Bankruptcy where they would learn our bankruptcy laws offer two non-bankruptcy alternatives for managing debt while still getting legal protection.
One solution works with large levels of unsecured debt and is available through licensed bankruptcy trustees anywhere in Canada. It is called a consumer proposal and it allows those accepted into the program to repay less than the total unsecured debt they owe at a reduced interest rate over a period of five years.
With the other solution – an orderly payment of debts – residents of Lethbridge repay all they owe over four years at a reduced interest rate and lower monthly debt repayments than they are currently making. An orderly payment of debts is only available in the provinces of Alberta, Saskatchewan, and Nova Scotia.
Not everyone qualifies for these alternatives. The most important requirement is stable income. The trustee or counselor begins the qualification process with a detailed evaluation of your personal financial circumstances. Based on your current income and family size, they determine a monthly payment you could afford to continue to make for four to five years.
The totals determine which option – a consumer proposal or an orderly payment of debts – is appropriate for you. In either case, Lethbridge residents need to think long and hard about their ability to stay current with those new monthly payments.
People deep in debt do not always think rationally. In an attempt to do anything to stay out of bankruptcy, it is possible to ignore how difficult it might be to continue with those payments. It is also possible to minimize the chances your income situation might change over such an extended period.
If you default on those payments, you leave yourself completely exposed to legal action from your creditors. The normal legal collection procedure requires creditors to take two steps. First, they must get a judgment order validating the debt as yours. Second, they must return to the courts to get an enforcement order to collect.
If you are enrolled in an OPD, creditors do not need a judgment order. They can proceed immediately with an enforcement order.
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