Navigate Debt Challenges with Personalized Solutions in Victoria BC

1. Find the best solution for you! • The first thing to understand is the debt industry is complex and designed to work in the favour of banks, credit card companies, and creditors. Finding the best solution for you isn't always a top priority for the firms helping you. • We’re trying to change that. • Today, we want to educate you on the debt industry and use our extensive experience to show you the best path out of debt. We will remove some of the confusion and tell you what many in the industry wont. www.4pillars.ca

2. The options for dealing with debt 1. Consolidation Loan • Allows you to avoid personal Bankruptcy or other types of debt restructuring • Will reflect more positively on your credit rating. • The terms of repayment may be more manageable • Consolidation is simply replacing one debt for another - and the loan payment may still be unmanageable. • Credit score and income will determine if the you qualify for a consolidation loan and this may require a co-signor and/or security. This is a good option if you have smaller, manageable amounts of debt, have good income and a strong credit score. www.4pillars.ca

3. 2. Non for profit Credit Counsellors. • If you are unable to meet your regular monthly debt payments an accredited non for profit credit counseling agencies can help establish a Debt Management Plan (DMP) • You deposit a monthly payment into a trust account, which in turn is distributed to your creditors. • Always look for a member of either Credit Counselling Canada or the Canadian Association of Credit Counselling Services and must be a registered Canadian charity www.4pillars.ca

4. Continued: • The Non-profit Credit Counsellors receive financing by creditors for the work they do in administering a DMP. • The repayment is usually 100% of debt but offers a reduction in the interest rates on future payments and the convenience of one monthly payment. • If the amount of debt is high, this may still be unaffordable as there is no reduction in the amounts repaid, only reduction in the interest rates. • Not all creditors will participate in a DMP including Canada Revenue Agency (CRA) • This process does not provide legal protection from the creditors As you are not paying back the debt on the original terms and conditions, this will reflect as R7 on your credit rating for the length of time it takes you to pay off the debt (usually 5 years) plus an additional 3 years (8 years in total) Please continue to watch as there are more options that may better suit your situation www.4pillars.ca

5. 4. Consumer Proposal • A Consumer Proposal is a formal offer to creditors made under the Bankruptcy and Insolvency Act (BIA). • It is a provision available to debtors that need new terms to repay the debt and want to avoid filing a bankruptcy. • If structured correctly can allow for you to significantly reduce the amount of your debt and substantially lower your monthly payment • New terms repaid interest free www.4pillars.ca

6. Continued: • The proposal for settlement must usually creditors with a better return than if you filed for bankruptcy. • Certain debts, such as alimony or family maintenance, fraud, cannot be included in the Consumer Proposal. • A Licensed Insolvency Trustee (LIT) is required to make any filing under the BIA. This reflects as R7 on your credit rating for the length of time it takes to repay the proposal (usually 5 years) plus an additional 3 years (total 8 years). www.4pillars.ca

7. 5. Bankruptcy • Bankruptcy is a formal arrangement and binding on creditors. • The bankruptcy process can last between 9 and 21 months, 36 months if you have been bankrupt before. • You are required to complete monthly income & expense reports for the length of the bankruptcy. • The monthly bankruptcy payment is determined by a formula which includes income, family size, and non-exempt assets. www.4pillars.ca

8. Bankruptcy Continued: • When you declare bankruptcy you hand over all your non-exempt assets to the LIT and these assets may be liquidated and the funds given to the creditors • Property exempt from seizure in a bankruptcy is set by the provincial government and applies to the equity in an asset. Bankruptcy has the most severe impact on your credit rating and reflects as R9 on your credit rating for 6 years after the discharge period. www.4pillars.ca

9. Who’s who in the debt industry. Now that we understand the options and what makes a good plan successful we need to know how to implement the plan, and who to seek advice from. 1. Your Bank If you have good credit, good income, and a manageable debt load but need to consolidate your debt payments into one monthly payment to make life easier, your local bank should be able to help you with a consolidation loan at reasonable interest rates. www.4pillars.ca

10. 2. Credit Counsellors They provide basic credit counseling and review the options in terms of a Debt Management Plan. Remember a large portion of the non-profit credit counselling funding comes from the creditors and you usually repay 100% of the debt with a negative impact on their credit rating. This may not always be the best program for a client with large debt loads and all options should be reviewed and compared. www.4pillars.ca

11. 4. Licensed Insolvency Trustee (LIT) A LIT is federally licensed and plays a critical role in debt restructuring as any formal restructuring plan (Bankruptcy or Consumer Proposal) filed under the Bankruptcy and Insolvency Act (BIA) must be filed with a LIT.  The duties and obligations of a LIT are contained in the federal BIA. ‘The dual role of the trustee is to investigate the debtors financial situation and to ensure that the debtors rights are not abused while also protecting the rights of my creditors’ Its important to understand that a LIT’s fees are set by a government tariff and are a percentage of whatever they collect and distribute to the creditors i.e. the more the client pays back, the higher the LIT’s fee. www.4pillars.ca

12. 5. 4 Pillars Financial Wellness Advocates. 4 Pillars is the largest independent debt solutions provider that only works for the debtors. 4 Pillars believe in the debt advisory business you either represent the debtors or the creditors and it seems impossible to do both. • The role of 4 Pillars is as a financial advocate to represent the interest of the debtors, not the creditors. • We will educate clients on all the options available so they can make an informed decision about the best plan to deal with your debt. • 4 Pillars represents the debtor when structuring a implementing the chosen debt solution to ensure the terms are agreed based on your long term financial goals. • 4 Pillars has a network of LITs across Canada and the LIT used is carefully selected based on their interpretation of the BIA and the clients unique situation. • Much like a mortgage broker with access to hundreds of lenders versus a bank employee with access to only the limited number of in-house mortgage products. • 4 Pillars plans have one of the highest success rates in the debt industry as we incorporate financial literacy coaching, budgeting, debt restructuring, and credit rebuilding as part of the service. www.4pillars.ca

13. Summary Its very important for debtors to understand the exact role everyone plays in the debt industry. Looking at how they are paid/funded can provide an indication if they face any conflicts of interest in truly representing the needs of the debtor. The good thing is a consumer has choice. For consumers that have a strong understanding of the Bankruptcy and Insolvency Act, the confidence interview a number of LIT’s and are not requiring comprehensive financial rehabilitation programs to reduce the impact on their credit rating working directly with a LIT can be a good option. For those requiring their own independent advocate, additional support and compassion, extended financial education/rehabilitation working with a debt advisor like 4 Pillars is an excellent option. www.4pillars.ca