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Bankruptcy in Canada Video 1 : Cost, What is a Trustee, Bankruptcy Process - YouTube
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Hi there and welcome to Understanding Personal
Bankruptcy in Canada, a five video introduction
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series.
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Today we will discuss what is personal bankruptcy,
what is the cost of personal bankruptcy, and
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personal bankruptcy and its effects on credit
rating.
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Most of the information on the internet on
personal bankruptcy in Canada is provided
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by companies that specialize in personal bankruptcy
and consumer proposals.
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Rarely is there any information out there
from those who have experienced the personal
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bankruptcy process and therefore can tell
you from their personal experiences what to
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expect.
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In this five video introduction series you
will hear first hand from those who have experienced
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this process.
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We understand what you are going through.
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We have been there.
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It is expected that most people will feel
uncomfortable discussing issues of bankruptcy.
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We have been through this.
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However, look at the brighter side, you can
possibly be debt free again.
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To fill that void, moneyandbusiness.ca has
collected the experiences of a few people
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who have declared personally bankrupt and
therefore can now share their experiences
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with you.
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The information we will provide you includes
the experiences of bankrupts, advices from
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a trustee and the information which your representative
may not know and therefore may not tell you.
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It is important to note that things that you
do not know in bankruptcy will hurt you for
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the next seven years.
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Any person who lives in Canada or owns a business
in Canada, owes more than $1000 and is not
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able to pay off the debts, is eligible to
declare bankrupt.
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To declare personally bankrupt is to petition
the Government of Canada under the Bankruptcy
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and Insolvency Act to permanently remove or
dissolve all debts owed.
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This process in effect, stops all bill collectors
or banks from soliciting you for sums owed.
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There are many conditions and stipulations
not mentioned here that can affect whether
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the discharge of debts is completed within
9 months or 36 months.
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There is no such thing as a do-it-yourself
bankruptcy in Canada.
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A trustee in bankruptcy are the only people
who can petition the Government of Canada
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to remove your debts and they will need to
be paid for their services.
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What is the Cost of Personal Bankruptcy?
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A Trustee's fees are set by the government
and it鈥檚 typically a maximum of $2000 however,
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most trustees may charge you approximately
$1800.
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Depending on your trustee, they may charge
you $200 per month for nine months which will
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complete the payments while other Trustees
in Bankruptcy will require a full payment
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before beginning any work.
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There are two ways to measure your credit
ratings.
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One is the R rating system and the other is
the FICO score.
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The R rating system ranges from R1 to R9 with
the exception of R6 and this chart is shown
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in the next slide
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If your credit rating score is excellent then
you are an R1.
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As payments become delinquent this could drop
to R9 for a full bankruptcy or anywhere in
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between for missed payments.
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A consumer proposal drops your rating to R7.
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Anyone having a rating of R3 or more may have
problems if a credit check is necessary.
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The FICO score ranges from 300 to 900 with
300 being the lowest and 900 being the highest.
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Most Canadians have a FICO score between 750
to 799 and that is considered a good score.
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This chart shows the credit score distribution
in Canada.
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Most people are between 650 to 849.
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At any one time, 25% of all adults in Canada
have a credit score less than 699 and that
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is considered a poor score.
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These probably have or had credit problems,
or may have filed a proposal or a bankruptcy.
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You are not alone.
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Any score that is less than 649 is considered
poor and there will be problems if a good
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credit score is required.
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And Now Summarizing
To Declare personally bankrupt in Canada,
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you must owe at least $1000 and be unable
to pay.
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The Personal bankruptcy process will cost
you $1800, and,
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The Credit Rating score, whether it鈥檚 the
R rating or the FICO score, will be affected
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for approximately 6 or 7 years after discharge
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If you鈥檝e enjoyed this video and found it
informative please look at the second video
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out of the five video series which will be
sent to you.
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To come in the next video, a discussion on
Family Heirlooms, Personal Assets, Vehicles
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and how these can be affected by a personal
bankruptcy.
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Thank you for watching.
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