Insolvency is one of the most complex situations an individual can face. When a person is unable to settle their debts due to financial difficulties, a consumer proposal is an advantageous option to get you out of over-indebtedness. This proposal must be made in accordance with the Bankruptcy and Insolvency Act.
However, depending on the circumstances, resorting to a consumer proposal is not always possible. In this article, you will learn the 5 types of non-dischargeable debts exempt from the process.
Child or Spousal Support Alimony Debts
Non-dischargeable debts are financial obligations protected by law and which must be repaid in full by an individual. Alimony is a fixed amount offered to support a child or a spouse and constitutes priority debt. You cannot request their cancellation, even in the event of bankruptcy.
Debts Related to Misrepresentation or Fraud
The offences of fraud or dishonesty committed intentionally are exempt from the procedure for the consumer proposal. Thus, any debt or loan contracted by fraud, deception, misrepresentation or the use of false information is not dischargeable and must be repaid in full.
Fines, Penalties, Offences and Legal Sanctions
All financial penalties the court imposes on an individual cannot be negotiated or erased. If you have debts resulting from a fine due to a traffic violation, for example, fraud or a court conviction, you cannot apply for a reduction in the amount. Administrative penalties and court convictions are not included in a consumer proposal.
Student Loan Debt
High tuition fees force some students to opt for student loans to finance their studies. This type of debt is considered non-dischargeable if the declaration of bankruptcy occurs less than 7 years after the end of studies. However, you have the possibility to request their cancellation after 7 years under certain conditions.
Compensation in a Civil Case
Debts resulting from a liability judgment for bodily injury, death or intentional damage cannot be discharged even in the event of bankruptcy or insolvency. For example, compensation ordered by the court following a bodily injury, accident or death.
A consumer proposal allows you to negotiate and reduce debts while protecting your assets. To apply, consult Bernier & Associates to assess your situation and determine your eligibility. Contact us today for more information on our services.