The Debt Pooling Program allows debtors to repay their debts at their own pace with one monthly payment that fits into their current budget. In effect this consolidates their debt load. Through this program, we have established over 150 lenders who have agreed to allow individuals the ability to repay their principal over an extended period of time at a reduced or 0% interest rate. Our specialists can help you to pay off your debt and rebuild your credit rating.
The Debt Pooling program is not part of the Bankruptcy and Insolvency Act (BIA). It is an informal arrangement we make with your creditors.
We are licensed to operate this program by Consumer and Corporate Affairs in Manitoba. We are bonded in accordance with provincial legislation in order to minimize any risk to the general public and to help ensure that the program is conducted in the public’s best interest.
Debt Pooling has a lot of flexibility primarily because it is a voluntary program. Unlike court ordered options such as the Orderly Payment of Debt, a Consumer Proposal, or Bankruptcy. These are legislated options and governed by the BIA, whereas Debt Pooling is a private and voluntary arrangement.
Some of the advantages of Debt Pooling are:
1. Payments are based on your ability to pay and are structured to fit into your current budget.
2. All fees are built into the monthly payment with the exception of the initial account opening fees.
3. We work to reduce or eliminate the interest, and most creditors will voluntarily lower the interest rate.
4. This program does not go to court, and requires no court order.
5. Creditors receive 100% of their principal back.
6. If your circumstances change, there is no penalty for default, with the exception of an account closing fee.
7. There is no penalty for paying out the program early.
8. There is an R7 credit rating for 3 years after completion of the program.
9. If your financial situation changes, all other options are still available.
10.If sufficient capital becomes available, we can make settlement arrangements with the creditors.
The program will allow the debts to be extended to a maximum of 60 months (5 years). We can get extensions in rare cases if more time is needed.
A Consumer Proposal is a legal process that allows a debtor, insolvent person, or business an opportunity to settle debts without filing for bankruptcy. The Consumer Proposal stops Judgments and Garnishments and allows for the repayment of debts as though they had been consolidated with a loan. This process is interest free and the client may pay less than what is actually owed. The balance of debts are forgiven and reported to the Credit Bureau as “paid in full”.
A Consumer Proposal may be filed jointly if the client is married or living in a common-law situation and both parties signed together on the majority of the debt.
Canada Credit Relief handles both individuals and families of all sizes who:
- Cannot meet their monthly minimum service payments of $10,000 or more of unsecured debt.
- Prefer to avoid bankruptcy.
- Have available cash flow to warrant a repayment schedule (at 0% interest) over a 36 to 48 month period.
- Would like to relieve stress, reduce debt and take control of their finances.
Anyone who finds themselves in the situation listed above is in a position for debt restructuring. If you’d like to get started, take our Free Assessment.
Different restructuring options have different effects on your credit rating. As a general rule any time you settle your debts at less than 100 cents on the dollar it will have a negative effect on your credit rating. For many, the question that must be asked is: is it worth it to take a hit on your credit rating to avoid paying back the money you owe? Any debts included in a Bankruptcy will show up on your credit bureau as an R9 (Bad debt; placed for collection; moved without giving a new address) while debts settled through an Informal Proposal appear as an R7 (Making regular payments through a special arrangement to settle debts).
The only way a person can rebuild their credit is to obtain new credit and then use it responsibly. The ability for a debtor to rebuild their credit after debt pooling will depend on many factors. For instance, it will depend on what type of debt restructuring the debtor has done as some are more damaging to a person’s credit report than others. Some types of debt restructuring can have the debtor start almost immediately while others cannot begin for up to 36 months.
It will also depend on how diligent a person is on reestablishing their credit rating and whether you have someone who is familiar with the credit system assisting you in ensuring you are doing the right credit rebuilding activities at the right time.
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We handle nearly every kind of debt imaginable, including credit card debt, bad loans, leases, mortgages and more.
The type of income a debtor receives does not limit the ability for debtors to carry out different restructuring options. In all cases, regardless of how a debtor feels, it’s about looking at all of the options available and then having the debtor choose the option that they feel works best for them based on their current circumstances.
Simply put, no you cannot retain the credit cards in which are entering into a debt management program.
What about people who have good credit standing, but also live paycheck to paycheck, always paying bills?
Making the decision to restructure can be a difficult one for some people. In this business “you can’t have your cake and eat it too”, which means that if you choose to deal with your creditors and stop living paycheck to paycheck the trade off is you will most likely take a substantial hit on your credit rating. Anytime you offer up less than 100% of your debt owed it will have a negative effect on your credit rating. Choosing to restructure means you should consider all your options and then make a choice based on options available and the best one for you. One option for some to consider with good credit is to consider a consolidation loan that protects your credit rating but be sure you don’t have any other underlying spending issues and a solid budget to follow.
If an individual debtor files for protection from their creditors in a Bankruptcy or a Consumer Proposal then all the assets of the debtor and any joint assets must be listed in the documentation. In addition, for the purposes of preparing a Consumer Proposal the incomes of both the debtor and his or her spouse must be listed.
If one person in a marriage has created the debt and the majority of it is in their name alone do they have to include the spouse in the process?
The spouse of a person who is in financial trouble does not have to be part of the process but certain aspects of their joint life must be disclosed as part of the process. This would include all assets that are considered “joint assets” where both names appear to own it, joint liabilities where both names are responsible for the debt and the combined income of the family. In most cases the spouses name may appear on the documents but he or she would generally not be required to meet with the Trustee, creditors (if applicable) or attend any meetings. In addition, nothing would appear on his or her credit rating except the history of any joint debts affected by the restructuring. In some cases the spouse then becomes 100% financial responsible of the joint debt once the person in trouble has settled with his creditors but this depends on whom the creditors are.
A person cannot be held responsible for someone else’s debt unless they have done the following:
- Both parties have signed for the credit card as a co-applicant
- The principle card holder has requested a supplement credit card for the spouse
If the spouse or common law partner does have a supplement credit card then we commonly use this questionnaire to determine if a supplement card holder is responsible for the debt:
- Does the credit card statement come in one name or both names?
- Does the spouse have a supplement credit card, if so, has it ever been used?
- Did both people sign up for the credit card as co-applicants?
Obviously, the more times you answer “Yes” the more likely you are to be responsible for the debt. It is important to note that there are “no hard fast rules” as some creditors will pursue supplement credit card holders while other creditors will not. In many cases it is as important to know who the creditor is as the outcome of the questionnaire.
Depending on the age of the student loan (you must be out of school for the past 7 years) and Canada Revenue agency debt, (it must be either personal taxes or Director Liabilities) they can be included in different restructuring options. Certain types of debts may not be included in restructuring but these are considered and reviewed on a case by case basis.
It depends on the age of the student loan. If it has been longer than 7 years since the last time you attended school then it is considered unsecured and therefore can be included in a Consumer Proposal or Bankruptcy. If the time is less than 7 years then it is protected by laws that protect the student loans from being included.
This will depend on what type of student loan you are planning to apply for and the severity of the type of restructuring you do.
We have successfully helped restructure the debts of over 5500 clients on various available programs. Most of our clients are honorable debtors who have chosen to show some restitution to creditors, thus avoiding bankruptcy.