Options Without Legal Protection
First, there are debt consolidation loans, in which new money is borrowed to repay old debt. These loans are almost always secured by the equity in your property. Some Canadians who eliminate $20,000 in credit card debt by borrowing $20,000 against their property are unable to resist the temptation to continue using their credit cards, resulting in new credit card debt in addition to the cost of the consolidation loan. If you fell into this trap and are unable to make your mortgage payments, you have no legal protection against foreclosure.
Second, there are the debt management plans and debt settlement plans provided by for-profit organizations that market themselves as debt solution companies, credit counseling agencies, or debt management consultants. If you enroll in one of their plans, creditors may admit you into the plan at their discretion. In addition, nothing prevents them from refusing to honor the agreement in the future.
Options affording Legal Protection
One of them, Orderly Payment of Debts, is only available in Alberta, Saskatchewan, Prince Edward Island, and Nova Scotia. To apply, you will need to engage with a non-profit counseling center.
The Consumer Proposal is a legally binding alternative to bankruptcy that is available to all Canadians. To determine if you qualify for this option, you must consult with a Licensed Bankruptcy Trustee. This option, coupled with an OPD, will immediately halt all collection activity against you. Courts order creditors to cease all ongoing actions, including wage garnishments, bank account attachments, and property liens, and prohibit them from initiating new actions or even communicating with you as long as you successfully complete your repayment plan.
As you presumably already know, these plans vary, but the issue of legal protection is frequently overlooked in favor of television-advertised debt relief options that typically have no legal standing.
How crucial is it to have legal protection? To answer this question, we must analyze the relationship between three essential aspects of your financial situation: your income, your debt, and your assets.
Revenue, Assets, and Total Obligation
If your total debt is low - $5,000 or less, according to many experts - and your income is sufficient to negotiate a consolidation of payments that will allow you to repay the balance in three years or less, it is likely that your creditors will honor the plan without taking action.
If your total debt exceeds $20,000 and you have a substantial income and assets, you may be in trouble. Your creditors could garnish your wages and place liens on your property.
Face-to-face meetings with either a reputable Credit Counselor in your area or a Licensed Bankruptcy Trustee, or both, are preferable to the Internet for obtaining specific information regarding alternatives to bankruptcy.
" - https://www.affordablecebu.com/
