If you are like most people, you never thought there might come a time when you needed to speak to someone about your debts. Something has happened that has made what used to be a manageable debt load into something overwhelming.
You are not alone in this crisis. In excess of 100,000 Canadians each year have to file some type of bankruptcy protection – either a consumer proposal or personal bankruptcy. 85% of these people have no prior experience with bankruptcy law. They don’t know who to see or what to do about their situation.
The single most important thing to know is that only a licensed trustee in bankruptcy can provide you with protection under bankruptcy law in Canada. Lawyers cannot file bankruptcy on your behalf. Neither can any of the myriad of “debt consulting” companies that have cropped up in the last 3 or 4 years.
Ok, but what do you need to ask the trustee when you see them?
“How much will this cost?” Every trustee I have ever spoken to does not charge a fee for your initial meeting. If you do pay a trustee a fee before you file the trustee is required by law to report the payment as part of your file, the trustee can’t keep it as a consulting fee earned before the file. Most won’t charge any fees at all until you actually file. Your payments are based on what option you choose and your situation. Make sure your trustee fully explains if you will be required to make surplus income payments or what assets you may keep or lose in a bankruptcy.
“What options do I have?” is the second question you should ask. Trustees are required by law to review all of your debt relief options, not just bankruptcy and consumer proposals. In order to properly advise you of your options, the bankruptcy trustee should ask you a series of questions; how much and who do you owe? What do you own? How much money do you have coming in each month? How much does it cost you to live? If they don’t ask you any of these questions then they can’t properly explain each of your debt relief alternatives.
“What should I do?” Trustees are not allowed to tell you what to do – they can tell you the ramifications of each of your options and then suggest which one(s) make the most financial sense. The final decision to file or not is yours and if you feel you are being pressured into choosing one solution over another then you might want to go and speak to someone else… As an aside, only 1 out of every 4 people that speak to our firm about their debts need to file either a consumer proposal or bankruptcy. The other 3 people are better off choosing one of the other debt relief options offered to them. The whole purpose of this exercise is to find the right solution for you and your family – it is not to sell you a bankruptcy that you don’t need.
“How do we get started?” There is a fair bit of information required to file a consumer proposal or bankruptcy, but your trustee should be willing to assist you as much as you need. If you’re simply handed a package and told to “fill this out and bring it back” you may want to go and speak to someone else. Also remember what I said earlier, you shouldn’t be asked for any money before you file. If you are being asked to pay some sort of upfront or preparation fee then go and see someone else…
There are many more questions that you can ask, but at the end of the day, what matters the most is that you feel comfortable with the bankruptcy trustee that you are dealing with. A consumer proposal and/or a bankruptcy often run for many years and if you aren’t comfortable with your trustee at the outset then it is unlikely you will become more comfortable with them over time.
Ask as many questions as you need to ask to understand the process and to be certain in your selection. The purpose of seeking the assistance of a bankruptcy trustee is to solve a debt problem – not to make things worse which is what can happen if you are rushed into a decision, or choose the wrong trustee to deal with your debts.
If you are considering declaring bankruptcy in Canada, our local bankruptcy trustees will be happy to answer these, and all of your questions about the bankruptcy process and bankruptcy alternatives. Book your free, initial consultation today.