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If you have unsecured debt of under $10,000 and live in the Province of Ontario filing bankruptcy may not be the best option for you. We suggest you contact the Office of the Super Intendent of Bankruptcy at 416-973-6441 to discuss your options, or you can visit their website here.

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Preferential Debt Repayment

I am quite far in debt with a number of unsecured lenders. I am potentially receiving a lump-sum of money in the next month or so, though no where near the total debt.

I am considering a proposal as a means to get back on my feet.

What am I to do with this lump-sum IF I receive it? Should I use it to reduce debt or should I keep it on hand to help fund the proposal?

Also, if I were to pay down one particular lender (student loans) who would not be bound to the terms of the proposal (less than 10 years), how many months would I have to wait before filing the proposal to eliminate the risk of having this lump-sum debt payment seen as preferential creditor treatment?

Posted from: Alberta

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One Response to “Preferential Debt Repayment”

Barton Goth – Goth & Company Inc. – Bankruptcy Trustees said...

The best thing to do would be to retain the money and instead of pay creditors directly, make it a lump sum payment at the beginning of the proposal. This way you will eliminate the risk of doing anything questionable. In terms of the prefrential issues, I am not in a position where I can advise you how to defeat the rights of creditors, but I can say that the period can be up to 5 years in some cases, so you are much better off not to be involved in anything like that.
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At this point I would suggest that you contact a local trustee, even before the receipt of the money so you can develop a plan of action to take care of the debts in question.