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You may be asking yourself "why am I able to file bankruptcy?" Now this question usually
doesn't come up until much later on after you've asked questions like "how am I going
to be able to pay this debt back?" or "how do I stop my creditors from calling?" or "how
am I going to survive with this garnishee on my wage?" Eventually what you do is you
stat saying "what is bankruptcy?" and when you find that out you say "how do I go bankrupt?"
Now there's numerous videos that we've done that talk about bankruptcy and you can certainly
contact our office, the number is here on the screen, and talk to any one of our support
staff or email us or visit our website. Bankruptcy is of course the last option. There's consumer
proposal that we're able to help allot of folks with and that's a great option to settle
your creditors with your debts and that does stop all of the calls and it stops garnishees
and all that and you would need someone like us to assist you with that but this video
isn't so much about what your options are. Really what this video is about is kind of
talking about why those options are there in the first place. Now you may not be interested
in this right now if you're not actually in a state of bankruptcy or you haven't filed
a proposal yet but once something is filed we often start thinking about "well why am
I able to do this?" And I thought this would be a good opportunity to kind of discuss sort
of the principles that are behind this insolvency law. So, 'insolvency' means an inability to
pay your debts as they become due and of course when we have someone that can't pay they're
debts, the creditors simply can't just walk away because what it can encourage unfortunately
is other people who have the ability to pay they're debts to simply not pay their debts.
So what they have is they have a trustee that will help you either file into bankruptcy
or as I said, file a consumer proposal. Now, regardless of which option is chosen by the
individual, the principles remain the same and there's essentially four principles. The
first principle being the rehabilitation of the debtor, so part of that rehabilitation
starts with stopping all of the creditors actions and getting the stress off your back.
During either a bankruptcy or a proposal there's a couple of counseling sessions you'd go to
with one of our financial counselors and they would help you kind of recognize how you got
in the situation, they'd want to talk to you about money management and consumption habits
and the warning signs of financial difficulty and credit usage. I mean it's important to
understand these counseling sessions aren't designed to make you feel bad or to explore
you know your childhood or any sort of things like that. It's actually just to help you
recognize how you've made choices and the choices that you're making now to help you
get in a better place going forward for your rehabilitation. Now the second principle that's
involved is the principle that all creditors should be treated equally and how they're
treated equally is that they would all get the same what are called dividends. So the
same amount of money so that way you're not favoring one creditor over another. And how
that would happen is that the trustee would take possession of certain assets that are
considered non exempt and and they would give those monies, sell them and give the monies
to the creditors or in the case of the consumer proposal because the assets don't get sold,
you actually just make payments to the trustee, the trustee equally distributes the money
to the creditors. Now the third principle that is involved is the investigation. So,
one of the things you would have to do when you look at any type of restructuring is you'd
have to create what's called a statement of affairs and what that is is it lists the things
that you own and the people that you owe and it also talks about what's gone on. So, have
you given things away? Have you had we redeem RRSP's to survive and things like that and
the trustee would investigate that. That way if something has been done that's inappropriate
or dishonest the trustee can say to the creditors, "this is what's happened" and to the individual
as well and say "hey we need to make this right" or the trustee can investigate so he
can say to the creditors "we've looked at this and this is the reasonings of why this
has happened so that the creditors are able to feel comforted that there is some investigation
going on and they are getting treated fairly just as you are because that's the role of
the trustee is to make sure everyone is treated fairly. And that kind of ties into the fourth
principle and that fourth principle is of course promoting faith within the system itself
and the idea behind that is if you can't pay your debts, that you're able to have a mechanism
which you can access to be able to be restructured so you and your family can move forward and
as well if you're not paying your debts there's a mechanism where the creditor can bring the
trustee in and the trustee can take control of the assets and make sure you know that
you're not dissipating them and giving them away. Kind of very complex ideas here and
you don't really need to understand these in order to look at a restructuring. We share
this just so you get a little idea of some of the reasoning behind this. Certainly feel
free to give my office a call and speak with one of the support staff and they can talk
to you about this and talk about how these specific principles will impact you in your
personal situation.