Tag: Bankruptcy Law

Think Twice Before Paying Debt Collectors: What You Need to Know

Posted on by Jordan Rumanek

Introduction:

Trapped in the relentless chase of debt collectors? It’s a tough spot, but there is a way out. In Ontario, many like you are dealing with similar financial setbacks. As an experienced licensed insolvency trustee, I bring a ray of hope – with the right knowledge and strategies, you can navigate these hardships and reclaim your financial stability. This article isn’t just a read; it’s your first step towards breaking free from the chains of debt.

 

The Impact of Debt Collection on Your Credit Score 

Credit Reports and Your Financial Health

Every missed payment is a dent in your credit score, monitored by reporting agencies like Equifax and TransUnion. It’s crucial to understand that settling debts in collections doesn’t instantly fix your credit score. In fact, debts remain on your report for six years from your last payment, and making a new payment could inadvertently extend this period.

 

The Long Shadow of Debt Collections

The long-term impact of debt collection on your credit score cannot be overstated. Your credit history plays a pivotal role in future financial opportunities, from securing loans to renting properties. It’s a delicate balance; sometimes, letting a debt age and disappear from your report is more beneficial than clearing it and resetting the clock.

 

The Realities of Paying a Collection Agency

Understanding the Dynamics of Debt Aging

Consider the age of your debt. Older debts nearing the end of the six- or seven-year mark on your credit report might be better left untouched. This strategy can sometimes lead to a quicker improvement in your credit score than if you had settled the debt.

 

Legal Considerations and Statute of Limitations in Ontario

Knowing Your Legal Rights and Limits

Debt collectors have a toolbox of legal actions, including wage garnishments and freezing bank accounts. Yet, Ontario’s statute of limitations offers a two-year buffer against legal pursuits for debt. Be aware that any payment or other confirmation of the debt, including by phone, can restart  this timeline, exposing you to extended legal vulnerability. You can find out more using this link.

 

Alternatives to Settling Debts with Collection Agencies

Strategies Beyond Payment

Broaden your horizon with these alternatives:

  • Debt Management Plans: Collaborate with counselors to structure your payments over a manageable timeframe.
  • Consumer Proposals: Drastically reduce unsecured debts and enjoy relief from creditor harassment.
  • Bankruptcy: Eliminate your unsecured debts and get relief from collectors, with costs depending on your income and/or asset value.

Each option shapes your future interactions with creditors and impacts your credit report differently. The key is to choose a path aligned with your financial situation and long-term goals.

  

Seeking Help: A Vital Step in Your Financial Journey

The Power of Protection: Dealing with Debt Collectors

If debt is overwhelming you, know that seeking help is a sign of pragmatism, not defeat. As a licensed insolvency trustee, I offer personalized strategies that cater to your unique financial situation. You are more than a statistic in the world of finance – you deserve a plan that recognizes and respects your individual journey.

 

The Human Side of Debt Resolution

Understand that you’re not alone in this journey. Financial struggles are a shared human experience, and there’s strength in seeking support. Reaching out for help can turn a daunting financial challenge into a manageable path forward.

 

Conclusion

Navigating the complexities of debt collection requires more than just financial savvy; it calls for a nuanced understanding of your rights and options. This guide aims to empower you with knowledge and encourage you to seek professional advice. Remember, your journey to financial recovery is not a solitary one. As a licensed insolvency trustee in Ontario, I’m here to help you chart a course to a brighter financial future. Don’t let debt collectors define your path – take the helm and steer towards financial freedom today.

 

Get Protection from Debt Collectors and a Debt Solution Tailored to Your Needs.

 

Creditors Must Vote to Accept

Posted on by Jordan Rumanek

Bankruptcy Credit ScoreCreditors Must Vote to Accept

If you have filed a proposal, you should have been told by your trustee that the creditors must vote to accept your offer. The creditors can vote “yes” or “no” or ask for an adjournment of the vote while they consider their position or ask you to supply them with more information. What do they consider when looking at your proposal? You spend hours putting together information and signing papers at the trustee’s office and – guess what – the creditor reviews proposals at the average rate of five (5) per hour. Not much time for you to convince them to accept your offer.

The first thing they look at is the amount that you are offering – obviously, the more you offer, the better your chance of success. The reason why you are in a financial difficulty is very important. Is your problem long term (e.g. medical, psychological, etc.) or short term (e.g. unemployment, divorce, separation, short-term injury, etc.) or somewhere in between. The creditor will review your history of payments.   You will not get much sympathy if you stopped making payments two (2) years ago but only became unemployed four (4) months ago. Some creditors such as Canada Revenue Agency (CRA) have information on their computer system such as the purchase of RRSP’s, RESP’s, investments that the average creditor does not have access to. A quick note regarding Canada Revenue Agency. If you are filing a proposal and Canada Revenue Agency is a creditor, please make sure that all of your tax returns have been filed up to date. CRA wants to know how much you owe (with interest and penalties) before they decide on whether or not to vote “yes” on the proposal.

One final thought. The size of your proposal and the amount of your debt to each creditor does matter. If you owe $100,000 total but it is split between 50 creditors @ $2,000 each, no individual creditor is going to spend too much time to evaluate your proposal. The next person could owe the same total of $100,000 debt but owes $20,000 to each of five (5) creditors. Each of these creditors will, of course, spend extra time to review your proposal simply on the basis of the size of your debt.

When putting together a successful proposal or debt consolidation offer to your creditors, everything is important. There is your current status, history with your creditors, future prospects, family situation, value and type of your assets and whether or not you lose any assets in your bankruptcy, all of which must be considered when preparing and submitting your proposal to your creditors. The skill an reputation of your trustee has been earned over many years of experience in dealing with creditors. Take advantage of that experience and knowledge when you are putting together your proposal. The trustee usually has a good idea of which creditors will vote “for” your proposal and which creditors will vote “against” the proposal. Remember, the creditors have no animosity against you personally. It is all about the money that they will lose in accepting your offer to settle.

Contact 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 Happens If I Lie To My Licensed Insolvency Trustee?

Posted on by Jordan Rumanek

What Happens If I Lie To My Licensed Insolvency Trustee?

It is a statutory obligation for every person filing an assignment in bankruptcy to make full disclosure of all assets, liabilities, income and living expenses. As well, you must disclose information as to the disposal of any of your assets within the past 12 months (5 years if the asset is real estate). If you intentionally do not disclose significant information to your trustee, you will have your discharge from bankruptcy opposed by the trustee.

You might even be required to appear in court to explain why you did not disclose full and complete information. The court can impose penalties on you, depending on the significance of the non-disclosure. You should also be aware that you are asked under oath to swear that all of the information that you gave to the trustee is reasonable and accurate to the best of your knowledge and belief.

Swearing a false affidavit is called “perjury” and now you may be charged under the Criminal Code as well as under the Bankruptcy and Insolvency Act. Not a good situation to find yourself in when you are already stressed out over your debts.

Please read our blog entitled – How a Trustee Searches for Hidden Assets.

Contact 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.  

Do I Have to Tell My Spouse About My Bankruptcy?

Posted on by Jordan Rumanek

old_debtDo I Have to Tell My Spouse About My Bankruptcy?

Now this is an unusual question. The technical answer is: you do not have to tell him or her anything. When you sign the papers to file an Assignment in Bankruptcy, you will be asked to sign a document under the Personal Information Protection and Electronic Documents Act (PIPEDA) which specifies that your trustee will only deal with those people that they are required to do so in order to perform their duty as your trustee. This normally includes only your creditors, Canada Revenue Agency, Office of the Superintendent of Bankruptcy, the court and any collection agencies or lawyers who have been hired by your creditors. If you wish to authorize your trustee to speak to any other party such as your wife/husband, children, employer, brother, sister, etc., you will be asked to do so in writing.

The trustee will not ordinarily disclose your bankruptcy to your employer. The exception is if one of your creditors tries to garnishee your wages. Your trustee can stop the garnishee, but, if the papers have already been sent to your employer, then your trustee will have to send your employer a letter to stop the garnishee.

With respect to your husband or wife, the issue can get more complicated. If they are a creditor, they must be notified for that reason. The usual problem is that your trustee will periodically be sending you documents, notices, etc. and you will have to make sure that your wife or husband does not open your mail. You should be aware that the envelope has only a return address with no name on it. If this is an issue, please speak to your trustee at the initial meeting and we will try to resolve it by way of Email, fax or an outside mail box service.

It is, of course, better to be honest and upfront with your partner about the financial problems and the fact that you have chosen bankruptcy as the solution to your problems.

Contact 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. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.

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