What is debt exclusion from bankruptcy? A bankruptcy or proposal will get rid of most of your debts, but not necessary all of them. This is because certain debts are secured to your assets. The most common being a mortgage on your home or a loan on your car. If you want to keep the house or car, you must continue to pay the debt secured to the asset. In addition, other debts listed in Section 178 of the Bankruptcy and Insolvency Act specifically exclude certain debts from being included in bankruptcy as a matter of public policy.
These debts include spousal support, child support, debts originating in fraud, debts incurred while acting in a fiduciary capacity. These also include debts resulting from an assault, fines and penalties awarded by a court (income tax, traffic and criminal). Finally, student loans are not included in your bankruptcy unless you have not been a student for seven years. However, in cases of severe hardship, a court can reduce the seven year limit to five years.
The federal government has several benefit programs for individuals over 65 who have lived in Canada for over 10 years. However, you must apply for Old Age Security (OAS), Guaranteed Income Supplement (GIS), Spouse’s Allowance, Canada’s Pension Plan (CPP) and other federal programs. You will not receive them automatically! Because many programs use your income tax return to decide if you are eligible, you should file a tax return by April 30 each year. This will also allow you to claim a GST rebate and other refundable tax credits. Remember to notify Service Canada if anything changes in your life. For example, if you are receiving OAS, GIS, the Allowance or CPP and you move or your situation changes, for example, if your spouse passes away.
How does the passage of time affect an unpaid account?
If you do not make a payment to your creditor then there will be consequences—and in some circumstances very quickly. In some situations where you fail to make a payment your creditor might be able to seize monies in your bank account under what is called the right of set-off.
This can happen where you fail to make a payment on a credit card, personal loan, or line of credit and you have a bank account at the same financial institution. Your financial institution can simply take monies out of your bank account at that financial institution to make your overdue payment.
As your account remains unpaid you can anticipate the following: 30 to 60 days overdue: At this point you should anticipate that you will receive collection notices and collection calls from your creditor. Six months overdue: By this stage your account will receive an R9 rating which is the worst possible rating. Typically, at this time your creditor has forwarded your account to a collection agency. Where a creditor chooses to sue a consumer it will likely do so where the account is between six months and two years overdue
Two years overdue: If your creditor does not commence a lawsuit against you within two years of the date of your last payment then it might be difficult for your creditor to recover any monies from you. Seven years overdue: By this time under Ontario law any reference to your unpaid account must be removed from your credit report.
Contact <a href="https://www januvia price.rumanek.com”>Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
What can I do if I cannot make my student loan payments?
Thousands of Canadians cannot afford to pay their student loans. The law in Canada punishes anyone making a consumer proposal or filing for personal bankruptcy if they recently stopped being a full-time student. Student loans are not forgiven unless a person can satisfy the 7-year waiting period or the discretionary 5-year waiting period based on financial hardship.
If you cannot make your monthly student loan payments then you do have a number of options:
Firstly, your lender might offer a number of debt relief options. Secondly, it might be to your advantage to make small token monthly payments. Thirdly, if you have not made a payment on your student loan for a minimum of six months you can explore negotiating a one-time lump sum payment as settlement in full—sourcing funds from family members or the sale of an asset.
Finally, you might want to consider credit counselling as a “bridging strategy”. Credit counselling might help you reduce your monthly payments on your unsecured consumer debt—but not your student loan -which might significantly improve your cash flow situation. Some Canadians seeking personal bankruptcy or a consumer proposal will use credit counselling until they satisfy the all-important 7-year waiting period.
If you want to make a consumer proposal or file for personal bankruptcy and you have ceased attending school a minimum of 5 years—but not 7 years–then you can bring a motion before a judge who has a discretion to grant you a discharge on the grounds of financial hardship.