Glossary of Terms

Credit counselling

– A program provided by companies who are, more often than not, supported by credit grantors. The program requires 100% interest free repayment of debts to creditors through monthly payments based on a percentage of your take home pay as well as a monthly administrative fee. This option does not guarantee that creditor harassment will cease.

Debt Consolidation / Consolidation loan

– A loan given by a financial institution that allows the borrower to roll-up their numerous small high interest debts into a single,
lower interest loan payment.

Tax Debt

– Monies owed to Canada Revenue Agency for unpaid personal income tax.

Wage Garnishments

– A court ordered judgement that requires an employer to deduct a portion of an individual’s monthly income and pay it directly to the creditor enforcing the judgement.

Student Loan

– A loan given by a financial institution such as a bank or the Ontario Student Assistance Program (OSAP) which enables a student to pay tuition and other school related costs.

Consumer Proposal

– A document presented to creditors proposing that an individual pay a portion of what she/he owes when the full amount of debt is insurmountable.

Bankruptcy

– A determination by a Court under the Federal Bankruptcy and Insolvency Act that a debtor’s assets are to be taken over by a Trustee for the benefit of his creditors and that he is required to complete a schedule of payment in order to be discharged.

Settlement

– An agreement whereby creditors accept a set of terms for the repayment of debt by a debtor, often in a reduced amount.

 Creditor

– A company or individual to whom one owes a debt.

Debtor

– An individual who owes a debt to another individual or company (creditor).

Trustee in Bankruptcy / Administrator of Consumer Proposals

– A Federally licensed individual who represents the insolvent Estate of an individual and acts as an intermediary between a debtor and his or her creditors. Trustees and Consumer Proposal Administrators are court officers who must seek out an option that is in the best interest of the creditors, not the debtor.

Discharge

– A Certificate of Discharge is issued upon completion of a bankrupt’s duties, which include attending two financial counselling sessions, indicating they have met all the requirements and are no longer a bankrupt individual.

Asset

– Anything owned by a person (in particular, by a debtor) that has a market value.

Exempt Asset

– While the Bankruptcy and Insolvency Act is a Federal Act, each province has different personal asset exemptions. A few of Ontario’s exemptions are:

1. If your vehicle is valued at less than $5,650.00 then it’s exempt from seizure
2. RRSP are exempt, except for contributions from the 12 months prior to filing bankruptcy
3. Tools of the Trade are exempt up to $11,300.00

Mortgage

– A security interest registered by a creditor on the title to a debtor’s property, which enables the creditor to sell the property if the debt is not repaid.

 Stay of Proceeding

– An Order of a Court preventing the continuation of a legal proceeding