Bankruptcy & Insolvency
Offices in Campbell River & Courtenay on Vancouver Island,
Powell River, Gibsons and Terrace

Proposals to Creditors - a Growing National Trend

According to Federal Government statistics making a debt settlement proposal or “offer” to settle with creditors is a growing trend across Canada.

• Although part of the Bankruptcy and Insolvency Act (“BIA”), Debt Settlement Proposals are distinctly different than bankruptcy. Some of the main differences are that a person’s assets do not vest with a trustee and a person’s credit history is less severely impacted.
• Debt Settlement Proposals offer a means to repay creditors in full, or in part, over a period of time.
• Debt Settlement Proposals must offer creditors more than what they would receive in bankruptcy.
• Most collection action is suspended after a debt settlement proposal is filed including income tax debt and garnishees.
• There are two types of debt settlement proposals that can be filed:
  • Division 1 proposal for large amounts of debt or complicated situation
    or alternatively;
  • Consumer proposals for a lesser amount of debts.
• One can be very creative in structuring a debt settlement proposal in order to allow some financial breathing room at the end of each month or during off season work periods such as fire shutdown.
• Creditors generally react favourably to Proposals because a Proposal will provide for a greater recovery than bankruptcy.
• A thorough detailed analysis of your financial situation is required to properly evaluate if a debt settlement proposal is suitable. This would include reviewing type and amount of debt, monthly income and living expenses, number of people in the household, age, and desire to repay.

Please do not hesitate to contact us for further information
or a free initial consultation.

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Lawson Magnusson Chase - Chartered Accountants -
www.lmc-ca.com, www.bcdebtsolutions.com
assisting people with accounting, bankruptcy & insolvency issues (trustee in bankruptcy) on Vancouver Island: Campbell River, Courtenay / Comox, in Powell River, Gibsons and Terrace, BC.

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