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Insolvency FAQ

Unsure what some of the insolvency terms we use mean?

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This handy FAQ will give you the information you need to understand all of the terminology. We will add to this FAQ over time as new topics are covered in our blog. And if you have a question about debt-free living or the insolvency process, please use the form at the bottom of this page to send it to us.


Bankruptcy is a legal process that provides financial relief to individuals and businesses who are unable to pay their debts. It involves a trustee liquidating your non-exempt assets to repay creditors and obtaining a discharge from most of your debts.

Consumer Proposal

A consumer proposal is a formal arrangement between you and your creditors to settle your debts. It is an alternative to bankruptcy and allows you to make manageable monthly payments over an extended period, typically up to five years.


Debt consolidation is the process of combining multiple debts into a single loan or payment. This can help simplify your finances and potentially lower your interest rates, making it easier to manage your debts.


A licensed insolvency trustee (previously known as a bankruptcy trustee) is a professional authorized by the Office of the Superintendent of Bankruptcy (OSB) to administer bankruptcy and insolvency proceedings. They are licensed experts who provide guidance and administer debt solutions such as bankruptcies and consumer proposals.

Trustee's Role

A licensed insolvency trustee assists individuals and businesses in financial distress by assessing their situation, explaining available options, and helping them navigate the insolvency process. They ensure your rights are protected and provide expert advice to help you achieve debt relief.

Stopping Collections

Once you file for bankruptcy or submit a consumer proposal, an automatic stay of proceedings is initiated. This legal protection prohibits most collection actions, including calls, wage garnishments, and lawsuits, providing immediate relief from creditor harassment.

Assets (home, vehicle, etc)

Insolvency law includes exemptions that allow you to retain certain assets necessary for daily living, such as household goods, a modest vehicle, and tools of your trade. However, non-exempt assets may be sold to repay your creditors. Best thing to do?  Meet with a Licensed Insolvency Trustee and get the facts from them. 

Time it stays on credit reports

A first-time bankruptcy will typically remain on your credit report for six years after discharge, while a consumer proposal will be recorded for three years after completion. Rebuilding credit is possible with responsible financial practices after the process is completed.

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