Debt, Bankruptcy, Credit Counselling and More: FAQs
On this page, Abakhan & Associates Inc. will answer questions our clients most frequently ask.
Yes, although the recovery of your credit depends entirely on how much effort you put into it. The credit bureaus will keep a record of your Bankruptcy / Proposal for several years which may make it more difficult to get good credit. Your credit will get steadily better so long as you maintain good payment practices. Some suggestions for recovering your credit are:
- Secured credit cards – some companies will offer you the use of a credit card if you give them a deposit
- Savings plans – showing that you can save money, and building positive financial habits reflects well on your financial future
- GIC Loans – GIC loans are often a good choice for rebuilding your credit as they offer little to no risk for the bank while at the same time making positive reports to the credit bureaus
There is no quick solution to rebuilding your credit; it requires time and diligence on your part.
Some debts may hold a joint responsibility for which a spouse may be held liable. If the debt was issued jointly, or even if your spouse was given and has used a "companion card", they are jointly responsible for every dollar of the debt. If your spouse has never used the card and it is solely in your name, the debt cannot be arbitrarily assigned to them.
Yes, although secured loans, for example a car loan, are treated differently in a bankruptcy. If you continue to fulfill your contractual obligations, you should be able to keep the car and there should be no effect on your co-signor. If you choose to stop making your payments, your co-signor will become liable for the debt. In British Columbia, for consumer goods, your secured creditors have the right to either seize the asset, thereby extinguishing the debt, or sue and give up their security so that they may pursue your wages or other assets.
Yes, below are the exemption amounts for British Columbia
- Equity in a home in Greater Vancouver or Victoria: $12,000
- Equity in a home not in Greater Vancouver or Victoria: $9,000
- Equity in household items: $4,000
- Equity in a vehicle: $5,000
- Equity in a vehicle if the debtor is behind on child care payments: $2,000
- Equity in work tools: $10,000
- Equity in essential clothing and medical aids: Unlimited
Yes, but you cannot be a director of a corporation while you are bankrupt. You must remit quarterly installments to Canada Customs and Revenue Agency if you are self-employed. You must disclose to any prospective creditor that you are a bankrupt before you request credit in your personal capacity while you are bankrupt.
Only RRSP contributions made in the 12 months prior to bankruptcy are available for liquidation by the Trustee, any contributions made prior to 12 months are exempt from seizure. Employer sponsored pension plans are wholly exempt.
If it has been at least 7 years since you were last registered as a student, they can be discharge in a bankruptcy. In certain circumstances where you can prove that to repay the student loan would create an ongoing hardship, the loans may be discharged, through court application as early as 5 years.
Some debts may not be discharged through a bankruptcy such as those resulting from:
- Damages from civil proceedings related to bodily harm intentionally inflicted, sexual assault or wrongful death.
- Court-imposed fines, penalties and restitution orders.
- Any debt or liability for alimony or support for children or a spouse living separately from you.
- Any debt or liability arising from fraud, embezzlement or misappropriation or defalcation while acting in a fiduciary capacity.
- Any debt or liability for obtaining property by false pretences or fraudulent misrepresentation.
- The dividend a creditor would be entitled to as a result of a bankrupt not disclosing a debt to the trustee.
Yes, they can. Canada Revenue Agency is now arguing that it may assert such a priority for any personal bankruptcy from June 18, 1998, for any debt due including for director's liability for source deductions under certain conditions. Before doing so, CRA must obtain a judgment and register it against you. This is a contentious area and may be subject to challenge in the courts.
Credit Counselling in Victoria, Surrey, Vancouver, Prince George, Vernon, Burnaby, Richmond & New Westminster
Turn to Abakhan & Associates Inc. for professional credit counselling in Victoria, BC. Our qualified credit counsellors work with you to find the best solutions for your financial situation. We review your income, expenses, debt, and assets in order to advise you on the best course of action so that you can rebuild your credit and manage your budget. For the credit counselling Victoria, BC trusts, contact Abakhan & Associates Inc. today.