Frequently Asked Questions

Here you will find answers to your frequently asked questions concerning financial issues and bankruptcy. Contact F. J. Zielski & Associates in Belleville, Kingston, Trenton, or Cobourg for further information. Flexible fee arrangements, flexible appointments, whatever you need we can help.

How do I know if I am in financial trouble?
There are certain “warning signs” that may indicate you are in financial trouble, such as:

  • Having no savings
  • Receiving frequent calls or letters from creditors or collection agencies
  • Looking for your next pay cheque, spending all your money before payday
  • Robbing Peter to Pay Paul, stalling one creditor to pay another
  • Using your credit cards or other loans to pay for everyday expenses
  • Having trouble making your minimum payments on your credit cards
  • Having your consolidation loan applications rejected
  • Not knowing what your real monthly expenses are, and wondering where all your money went

Is bankruptcy my only option?
If you are in financial trouble, you may believe that bankruptcy is your only option. However, there are many options to help you solve your money troubles – such as consolidating your loans, credit counselling, or making a consumer proposal. F. J. Zielski & Associates Inc. can help you decide which option is best for you.

Do I qualify for a consumer proposal or bankruptcy?
To qualify for a consumer proposal or bankruptcy, you must:

  • Owe at least $1,000
  • Unable to pay your debts on time
  • Owe more than the fair market value of all your assets (i.e. house, car, etc.)

Can I still run my own business?
Yes! An individual may run or open a business while in bankruptcy. The individual may be required to disclose that they are bankrupt to suppliers and others from whom they receive credit.

What about a corporation?
A corporation is an entity onto itself. Think of it as a person, however, unlike a personal bankruptcy there are no exemptions for assets to be kept. A resolution of directors must be made authorizing the company to declare bankruptcy, and the directors of the corporation will work with the trustee. Unlike a personal bankruptcy, a corporation will not receive a discharge from bankruptcy unless all the debts have been paid in full.

Should I declare bankruptcy?
Bankruptcy is only one option when you are having financial trouble. To decide which option is right for you, you should start by meeting with a F. J. Zielski & Associates Inc. advisor for a free, no obligation, and private consultation. During this meeting, we can discuss your personal situation and explain your options, so you can make an informed decision.

Should I file a consumer proposal?
To decide which option is right for you, you should start by meeting with a F. J. Zielski & Associates Inc. advisor for a free, no obligation, and private consultation. During this meeting, we can discuss your personal situation and explain your options, so you can make an informed decision. If you have stable income sufficient to make payments over a period of time, and would like to avoid bankruptcy then a consumer proposal may be the solution for you.

How much does it cost to declare bankruptcy?
In a bankruptcy, the trustee’s fee is governed by the Bankruptcy and Insolvency Act. F. J. Zielski & Associates Inc.’s is a small firm whose mission is to help unfortunate debtor’s obtain a financial fresh start, we will set up a payment plan you can afford.

How much money do I pay each month in a consumer proposal?
That is where the experience or your administrator and your financial situation comes into play. Your proposal administrator will work with you to develop the best proposal in your exact circumstance.

For how long will I need to make payments in a consumer proposal?
The length of your proposal depends on your financial situation. You may make one lump sum payment or monthly payment up to a maximum of 60 months.

If I go bankrupt, will I lose everything?
No! Although your assets vest with the trustee, certain assets are exempt. For instance, in many situations, you can keep your house and car in a bankruptcy, as long as you continue to pay your secured creditors. You can also keep your furniture, personal items, and various equipment you need for your work.

Will I lose my assets in a consumer proposal?
No. The biggest advantage of a consumer proposal is that you get to keep all of your assets, none of them from part of the restructuring like in a bankruptcy.

Is my life insurance affected?
Certainly you are entitled to continue with your life insurance after bankruptcy, however where your policy has a cash surrender value and the beneficiary is your own estate, you would lose the cash value of the policy in a bankruptcy. The other benefits of the policy would remain intact.

Once I declare, what happens to my debts?
Once you declare bankruptcy or file a consumer proposal, you will no longer have to deal directly with your creditors; there is a stay of proceeding in place where by all your creditors must file a proof of claim with your trustee. That means that lawsuits and wage garnishments against you will stop.

What happens if someone co-signed a loan for me?
Anyone who has co-signed a loan for you will still be responsible to make loan payments after you go bankrupt.

What about alimony and maintenance?
Alimony or maintenance payments are not affected by bankruptcy or a consumer proposal. These payments must be kept up to date. A bankruptcy or consumer proposal does not stop garnishments by FRO for collection. Alimony and maintenance are provable claims in bankruptcy and which must be included and disclosed to your trustee.

What about student loans?
Student Loans are now dischargeable from bankruptcy once the student has been out of school for 7 years, effective July 7, 2008. This replaces the previous 10 year rule.

What happens to my wages?
When you file a consumer proposal or declare bankruptcy, you will receive your wages as usual from your employer free of any garnishments except those for child or spousal support. You will be required to make monthly payments to your trustee depending on your net monthly income and size of family.

What happens if my consumer proposal is rejected?
If your creditors do not accept your consumer proposal, you have one of two options.

  • Amend the terms of the proposal to those which your creditors will accept.
  • Reconsider other options for solving your money trouble, or file bankruptcy. Note that even if the proposal is rejected, you will not be automatically bankrupt.

Will I still owe income taxes?
Like all unsecured debts, taxes will generally be discharged upon the completion of your consumer proposal bankruptcy, subject to Section 178 of the BIA.

Will all my debts be gone after I declare bankruptcy or file a consumer proposal?
Even when you file a consumer proposal or declare bankruptcy, you will still owe money on certain debts pursuant to Section 178 of the BIA. These include student loans that are less than 10 years old; alimony, child, or spousal support; certain court fines or penalties; and debts you incurred due to fraudulent misrepresentation.

How long will I be bankrupt?
First time bankrupts are eligible for an automatic discharge 9 months after the bankruptcy started. Subsequent bankruptcies require the court to grant the discharge.

Who will find out?
Most bankruptcies are not published in the newspapers. Newspaper announcements are reserved for corporate and very large personal bankruptcies. Once you declare bankruptcy, the trustee will notify all your creditors, and the Superintendent of Bankruptcy, your employer will generally only be notified if the trustee has to stop a garnishment of your wages. Bankruptcy is a matter of public record, therefore if someone did a search they would learn of your bankruptcy.

How will credit counselling affect my credit rating?
The credit bureau will record any repayment plan, using a non-profit credit counsellor will not give you a better credit rating. In fact, it will likely take longer to re-establish a good rating.

How will bankruptcy affect my credit rating?
Bankruptcy is usually a last resort for people experiencing financial difficulties. As such, many individuals already have a poor credit rating before they declare bankruptcy. The credit bureaus will normally keep a record of the bankruptcy for 7 years and will list you as an R9. Bear in mind if you do not pay your debts you may end up at R9 without a bankruptcy, and remain there for longer than 7 years.

How will a consumer proposal affect my credit rating?
The credit bureaus will normally keep a record of the consumer proposal for a period of 7 years and will list you as an R9 during the proposal. Once the proposal has been completed the credit bureaus will list you as an R7 for the remainder of the 7 year period. Bear in mind if you do not pay your debts you may end up at R9, and remain there for longer than 7 years.

What is a trustee in bankruptcy?
Trustees are the most highly trained and educated debt consultants and restructuring professionals in Canada. They are licensed through Industry Canada and the Office of the Superintendent of Bankruptcy. Almost all trustees have both a professional designation and a university degree. Before receiving a license to practice all trustees must complete and pass an exhaustive bankruptcy and law course, pass the two-day National Insolvency Exam, be investigated by the RCMP, and appear before the oral board of examiners. Once licensed, trustees must keep up with current case law BIA amendments through mandatory professional development.

What is a proposal administrator?
A proposal administrator is a licensed trustee in bankruptcy who has been appointed or designated by the superintendent to administer consumer proposals.

What does a trustee in bankruptcy or insolvency do?
A trustee in bankruptcy, also referred to as a trustee in insolvency, works with you to understand your financial situation. A trustee is an officer of the court licensed to administer the Bankruptcy and Insolvency Act. They act in a fiduciary capacity to enforce your rights and those of your creditors pursuant to the BIA. If you decide to declare bankruptcy, the trustee will prepare all the necessary documents and file them with the Official Receiver. The trustee will notify all your creditors of the bankruptcy and will deal directly with your creditors during the bankruptcy. The trustee will monitor your income during the bankruptcy and will provide you with two counseling sessions to help you get a fresh financial start.

How do I choose the right trustee?
It is important to work with a trustee that listens to your needs and understands your concerns. We at F. J. Zielski & Associates Inc. have been serving the Quinte region since 1981, we are a small firm who will work with the individual debtor, we do not have the big firm cookie cutter mentality, you will meet the people who work on your file, and we are always accessible.

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