Navigate Debt Challenges with Personalized Solutions in Victoria BC

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Find the best solution for you!

• The first thing to understand is the debt
  industry is complex and designed to work in the
  favour of banks, credit card companies, and
  creditors. Finding the best solution for you
  isn't always a top priority for the firms helping
  you.
• Were trying to change that.
• Today, we want to educate you on the debt
  industry and use our extensive experience to show
  you the best path out of debt. We will remove
  some of the confusion and tell you what many in
  the industry wont.

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• The options for dealing with debt
• 1. Consolidation Loan
• Allows you to avoid personal Bankruptcy or other
  types of debt restructuring
• Will reflect more positively on your credit
  rating.
• The terms of repayment may be more manageable
• Consolidation is simply replacing one debt for
  another - and the loan payment may still be
  unmanageable.
• Credit score and income will determine if the you
  qualify for a consolidation loan and this may
  require a co-signor and/or security.
• This is a good option if you have smaller,
  manageable amounts of debt, have good income and
  a strong credit score.

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• 2. Non for profit Credit Counsellors.
•  
• If you are unable to meet your regular monthly
  debt payments an accredited non for profit credit
  counseling agencies can help establish a Debt
  Management Plan (DMP)
• You deposit a monthly payment into a trust
  account, which in turn is distributed to your
  creditors.
• Always look for a member of either Credit
  Counselling Canada or the Canadian Association of
  Credit Counselling Services and must be a
  registered Canadian charity

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Continued

• The Non-profit Credit Counsellors receive
  financing by creditors for the work they do in
  administering a DMP.
• The repayment is usually 100 of debt but offers
  a reduction in the interest rates on future
  payments and the convenience of one monthly
  payment.
• If the amount of debt is high, this may still be
  unaffordable as there is no reduction in the
  amounts repaid, only reduction in the interest
  rates.
• Not all creditors will participate in a DMP
  including Canada Revenue Agency (CRA)
• This process does not provide legal protection
  from the creditors
• As you are not paying back the debt on the
  original terms and conditions, this will reflect
  as R7 on your credit rating for the length of
  time it takes you to pay off the debt (usually 5
  years) plus an additional 3 years (8 years in
  total)
• Please continue to watch as there are more
  options that may better suit your situation

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• 4. Consumer Proposal
• A Consumer Proposal is a formal offer to
  creditors made under the Bankruptcy and
  Insolvency Act (BIA).
• It is a provision available to debtors that need
  new terms to repay the debt and want to avoid
  filing a bankruptcy.
• If structured correctly can allow for you to
  significantly reduce the amount of your debt and
  substantially lower your monthly payment
• New terms repaid interest free

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• Continued
• The proposal for settlement must usually
  creditors with a better return than if you filed
  for bankruptcy.
• Certain debts, such as alimony or family
  maintenance, fraud, cannot be included in the
  Consumer Proposal.
• A Licensed Insolvency Trustee (LIT) is required
  to make any filing under the BIA.
• This reflects as R7 on your credit rating for the
  length of time it takes to repay the proposal
  (usually 5 years) plus an additional 3 years
  (total 8 years).

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• 5. Bankruptcy
•  
• Bankruptcy is a formal arrangement and binding on
  creditors.
• The bankruptcy process can last between 9 and 21
  months, 36 months if you have been bankrupt
  before.
• You are required to complete monthly income
  expense reports for the length of the bankruptcy.
  
• The monthly bankruptcy payment is determined by a
  formula which includes income, family size, and
  non-exempt assets.

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• Bankruptcy Continued
• When you declare bankruptcy you hand over all
  your non-exempt assets to the LIT and these
  assets may be liquidated and the funds given to
  the creditors
• Property exempt from seizure in a bankruptcy is
  set by the provincial government and applies to
  the equity in an asset.
• Bankruptcy has the most severe impact on your
  credit rating and reflects as R9 on your credit
  rating for 6 years after the discharge period.

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Whos who in the debt industry.   Now that we
understand the options and what makes a good plan
successful we need to know how to implement the
plan, and who to seek advice from.   1. Your
Bank   If you have good credit, good income, and
a manageable debt load but need to consolidate
your debt payments into one monthly payment to
make life easier, your local bank should be able
to help you with a consolidation loan at
reasonable interest rates.
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2. Credit Counsellors   They provide basic credit
counseling and review the options in terms of a
Debt Management Plan. Remember a large portion
of the non-profit credit counselling funding
comes from the creditors and you usually repay
100 of the debt with a negative impact on their
credit rating. This may not always be the best
program for a client with large debt loads and
all options should be reviewed and compared.
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4. Licensed Insolvency Trustee (LIT)   A LIT is
federally licensed and plays a critical role in
debt restructuring as any formal restructuring
plan (Bankruptcy or Consumer Proposal) filed
under the Bankruptcy and Insolvency Act (BIA)
must be filed with a LIT.  The duties and
obligations of a LIT are contained in the federal
BIA. The dual role of the trustee is to
investigate the debtors financial situation and
to ensure that the debtors rights are not abused
while also protecting the rights of my
creditors Its important to understand that a
LITs fees are set by a government tariff and are
a percentage of whatever they collect and
distribute to the creditors i.e. the more the
client pays back, the higher the LITs fee.
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• 5. 4 Pillars Financial Wellness Advocates.
• 4 Pillars is the largest independent debt
  solutions provider that only works for the
  debtors. 4 Pillars believe in the debt advisory
  business you either represent the debtors or the
  creditors and it seems impossible to do both.
• The role of 4 Pillars is as a financial advocate
  to represent the interest of the debtors, not the
  creditors.
• We will educate clients on all the options
  available so they can make an informed decision
  about the best plan to deal with your debt.
• 4 Pillars represents the debtor when structuring
  a implementing the chosen debt solution to ensure
  the terms are agreed based on your long term
  financial goals.
• 4 Pillars has a network of LITs across Canada and
  the LIT used is carefully selected based on their
  interpretation of the BIA and the clients unique
  situation.
• Much like a mortgage broker with access to
  hundreds of lenders versus a bank employee with
  access to only the limited number of in-house
  mortgage products.
• 4 Pillars plans have one of the highest success
  rates in the debt industry as we incorporate
  financial literacy coaching, budgeting, debt
  restructuring, and credit rebuilding as part of
  the service.

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Summary

• Its very important for debtors to understand the
  exact role everyone plays in the debt industry.
  Looking at how they are paid/funded can provide
  an indication if they face any conflicts of
  interest in truly representing the needs of the
  debtor.
• The good thing is a consumer has choice. For
  consumers that have a strong understanding of the
  Bankruptcy and Insolvency Act, the confidence
  interview a number of LITs and are not requiring
  comprehensive financial rehabilitation programs
  to reduce the impact on their credit rating
  working directly with a LIT can be a good option.
  For those requiring their own independent
  advocate, additional support and compassion,
  extended financial education/rehabilitation
  working with a debt advisor like 4 Pillars is an
  excellent option.
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