Information from canadabanruptcy.com's website has indicated that we have a serious credit problem, though I didn't need them to tell me that.

My wife and I have no assets (no car, home, stereo, furniture, appliances, tv, vcr, real estate, insurance, investments etc.) other than clothing, books and 'tools required to earn an income'. Everything we owned was liquidated 18 months previous in order for us to move in hopes of finding a better income and paying down our debts. Today we are back in Alberta and are faced with debts approaching $30,000 plus a student loan.

Filling out the forms on the above mentioned website suggested that a Trustee could only take $165 a month (based on an employment position I'm hoping to obtain) and that it would take in excess of 13 years with no interest to pay down our debts (not including the student loan).

I think this precludes us from an OPD agreement, however we're wondering about the benefits of entering a partial-payment proposal. Would filing such a proposal with a payment of only 10-15% of debt-owing paid over time leave us in a better position with future creditors than outright bankruptcy? What would my credit report reflect in such an arrangment?

Second, can the lawyer who drew up our wills and handled previous legal issues for us handle our bankruptcy, or must they be registered as a Trustee already? Who is allowed to act in this position?

Generally, a proposal should leave you in a better position than a bankruptcy, as far as your credit record is concerned. Bankruptcy shows as an R9 for 6 years after you have been discharged while proposals show at R7 for 3 years after you complete the proposal.

Whether a proposal is better for you than a bankruptcy will depend on your future creditors and how they view each process, as well as your current and future circumstances. Without knowing all the details it's difficult to comment on your best option. Most Trustees, such as Collins Barrow, offer a free first initial consultation where your options are set out and discussed with you.

Bankruptcy and proposals under the Bankruptcy and Insolvency Act in Canada must be filed through a Trustee licensed by the Federal Government (Collins Barrow has 6 licensed Trustees.)

Ann Clarke
phone: (403) 296-2972
aclarke@moneyhelp.ca