Options may include a consolidation loan with lower interest rate, making individual arrangements with your creditors to have payments lowered, interest reduced and/or selling assets to pay debt.
Formal options include Orderly Payment of Debt, filing a consumer proposal or as a last resort filing a bankruptcy.
If you are using credit as a means to pay other creditors, then you may be “insolvent” and should consult the services of a debt re-structuring professional.
Other warning signs or indicators that you should consider seeking professional help may include:
1. You do not practice proper budgeting
2. You exceed your spending limits, are regularly in your overdraft and/or use credit cards to meet obligations
3. Borrowing money to get from payday to payday
4. Creditors take legal action such as garnishment or asset seizure
5. Creditors are calling you for payments on a regular basis
6. You are selling assets to meet debt obligations
7. Utilities and basic services are interrupted for non-payment
Debt re-structuring may allow you to get your finances in order, start planning your financial affairs to increase your net worth; reduce stress in your household and allow you to manage your day to day affairs with confidence
Orderly Payment of Debt
This is a provincially regulated program that is no longer offered by the Saskatchewan government but is still an option in some other provinces. The main requirement under an Orderly Payment of Debt program is that you must be able to pay your creditors in full plus annual interest of five percent over a period not generally longer than five years.
The consumer proposal process is a formal proceeding administered by a Licensed Insolvency Trustee under the provisions of the Bankruptcy & Insolvency Act. A proposal generally requires insolvent debtors to offer unsecured creditors more than they would receive if you had declared bankruptcy. Under a consumer proposal you are not required to give up your non-exempt assets as you do in a bankruptcy and payments required may be for a lower amount than in bankruptcy, however over a longer period of time.
There is a Stay of Proceedings against all creditors from the time that the proposal is filed to prevent any one creditor from taking legal action until the proposal has been dealt with.
As with consumer proposals, when bankruptcy is filed there is a Stay of Proceedings against all creditors stopping any collection action. A bankruptcy will affect your credit rating for a number of years after you have been discharged from the bankruptcy process.
During bankruptcy, duties include providing full financial disclosure to the trustee, attend two financial counseling sessions, provide monthly income and expense information and assist the trustee in realization of any assets that may not be exempt. You are allowed to keep certain assets (exempt assets) that are specified under the Enforcement of Money Judgments Act of Saskatchewan.
An individual who is a first time bankrupt may be eligible for an discharge from bankruptcy after nine months or twenty-one months without a court hearing (depending on income).
In the event that you have surplus income you may be required to stay in bankruptcy longer than nine months. In the event you have been bankrupt previously or there are conduct issues, you will be in bankruptcy for longer than nine months. The courts may determine what the terms of discharge will be.
The court can grant different types of discharges depending on the facts of your case. They may grant an absolute, conditional or a suspended discharge.
It is important to seek the assistance of a licensed insolvency Trustee before you make any decisions. We will provide you with sufficient information to enable you to make informed decisions concerning your existing debt and allow you to plan your financial future with certainty and knowledge
Exemptions in Saskatchewan
The Enforcement of Money Judgments Act of Saskatchewan and the Saskatchewan Farm Security Act legislate what assets a debtor may keep in the event that they are required to file a bankruptcy or proposal. You must remember that these exemptions may still be subject to the rights of secured creditors. For example you are allowed to keep a certain amount of equity in your principal residence however you would still be required to pay your mortgage and property tax. Every province has its own exemption legislation.