Debt Relief Experts
What exactly is bankruptcy credit counselling, and why must I attend if I file for bankruptcy or a consumer proposal?
Bankruptcy counselling in Canada is a mandatory part of the bankruptcy process. These counselling sessions are led by Licensed Insolvency Trustees or qualified BIA Insolvency Counsellors. The primary goal is to help you understand the factors that led to your financial difficulties and provide you with tools to manage your finances more effectively in the future.
Table of Contents
When Counselling Sessions Occur
The current standard, as set by the Office of the Superintendent of Bankruptcy (OSB), requires a person who files either bankruptcy or a consumer proposal to attend two counselling sessions. The first session occurs between days 10 and 90 after filing. The second session occurs at least 30 days after the first but must be completed before bankruptcy discharge or the certificate of full performance in the case of a consumer proposal.
Credit counselling sessions can be performed in person or by video-conferencing. In rare situations, phone counselling is possible.
While the counsellor is paid $85 per session, this fee is covered by your bankruptcy estate. This means these valuable counselling sessions are free for you to take. At Hoyes Michalos, we are also happy to provide free additional counselling sessions if you need further assistance or have additional questions about your insolvency filing.
Failing to attend these two mandatory counselling sessions will jeopardize or delay your discharge.
What’s Covered in Bankruptcy Counselling
Bankruptcy counselling sessions are comprehensive, covering a wide range of topics to help you rebuild your finances post-insolvency.
The content is tailored to your specific situation; however, here are some topics you can expect to discuss.
In your first session, your credit counselling will review your current financial situation and help you develop essential money management skills, including:
-
Explain how debt works, including interest and minimum monthly payments
-
Address your questions about the bankruptcy process, including proposal voting and income and expense reporting in a bankruptcy. Depending on the timing of your first session, your LIT may be able to indicate whether your proposal has been approved.
-
Guide you through creating a budget, including planning for periodic costs
-
Discuss the importance of opening a separate bank account for savings and future expenses
-
Help you plan for future financial needs, such as retirement, children’s education, and other financial goals
- Explain why you should have an emergency fund
-
Explain how to obtain a free copy of your credit report
-
Offer strategies for effective communication with your partner about money and setting financial boundaries
-
Identify warning signs of financial difficulty, including compulsive shopping, alcoholism, drugs and gambling, if applicable
-
Introduce helpful budgeting tools, such as the FLIPP app, for finding deals
-
Provide additional resources, including those from the Financial Consumer Agency of Canada (FCAC)
The second session builds on this foundation, focusing on:
-
Credit repair strategies and understanding credit scores
-
How to apply for a secured credit card
-
Responsible use of credit
-
Developing and refining your financial goals and creating strategies to achieve your financial objectives
Throughout both sessions, your counsellor will provide a supportive environment where you can ask questions and gain the knowledge you need to move forward confidently.
Considering bankruptcy
The Benefits of Credit Counselling
Bankruptcy counselling offers a supportive environment to gain financial literacy and cover any concerns you may have about your recovery.
There is a difference between the counselling sessions offered in bankruptcy and services provided by a credit counselling agency. Credit counselling should help people look at their budget and build stronger personal finance habits. It should not be just about filing a debt management plan, which is the focus of some credit counselling companies.
At Hoyes Michalos, we are so committed to helping you gain a fresh start we have an entire for clients-only section on our website called the Fresh Start Program. We provide valuable resources to help you learn to manage your money better and build a stronger financial future. We also offer a monthly newsletter with tips and strategies to help you live a debt free life.
If you’re considering bankruptcy or have questions about the counselling process, don’t hesitate to reach out to Hoyes Michalos. Our experienced team of Licensed Insolvency Trustees can guide you through your options and help you take the first step towards financial recovery. Contact us today for a free consultation.
