Orderly Payment of Debts
What Is Orderly Payment of Debts?
Orderly Payment of Debts (OPD) is a debt payment alternative to bankruptcy in Canada, offered under the Bankruptcy and Insolvency Act.
OPD is available only in Alberta, Saskatchewan, Prince Edward Island, and Nova Scotia. If you live in one of these provinces, an OPD program – also known as a “consolidation order” – may be a suitable solution to your debt problems. Quebec residents have access to a similar process known as voluntary deposit, which is geared to income and number of dependents.
Manitoba and British Columbia had OPD programs at one time, but have cancelled them.
Features of Orderly Payment of Debts
- Creditors are contacted on your behalf
- Most of your unsecured debts are consolidated
- One monthly payment, based on what you can afford to pay
- Repays your debts in full in three years or less
- Interest rate reduction to 5%
- Legally binding on your creditors
- Protects you from legal actions (such as garnishment) and credit harassment
- You keep your assets, such as your house and car
- You have help from a counsellor
- You are strongly encouraged to learn budgetting and credit skills at free workshops
- You can learn how to rebuild a good credit rating
- Avoids more extreme solutions, namely consumer proposal and bankruptcy
Differences Between OPD and Consumer Proposal
Consumer proposal is another alternative to bankruptcy in Canada, and can remedy more advanced debt problems than OPD. It extends the time (usually up to five years) to pay off your debts, and, like OPD, is legally binding on your creditors. Unlike OPD, consumer proposal eliminates the interest on debts. Also, consumer proposal often involves a reduction to the principal amount owed, in accordance with the debtor’s ability to pay. Consumer proposals can include property tax and income tax debts, which OPDs cannot.
Since consumer proposals often last longer that Orderly Payment of Debts, the impact on your credit rating can be lengthier. Also, in certain cases some personal assets may need to be liquidated.
A Licensed Insolvency Trustee can help you determine which of these solutions, OPD or consumer proposal, might work best for your situation.
What About Bankruptcy?
Although sometimes referred to as a “last resort,” bankruptcy is simply another process that offers the opportunity for a fresh financial start. The process of bankruptcy is more difficult than that of OPD or consumer proposal, but it can solve more serious financial problems.
Personal assets, such as houses and vehicles, must often be liquidated in bankruptcy to pay creditors, and the impact on the debtor’s credit rating is more serious and longer lasting than with OPD or consumer proposal.
The Importance of Acting Quickly
You’ve now read about the basic facts concerning Orderly Payment of Debts, consumer proposal and bankruptcy. Which of these solutions would work best for you? Part of the answer lies in how far you are along the road of insolvency.
The faster you act to resolve your debt problems, the more options you will have. Each debt solution discussed in this article has certain qualifications that must be met: if you no longer qualify for OPD, consumer proposal might work, as it has for thousands of Canadians. And, if your debt problems are very serious, bankruptcy, with its greater impact on your lifestyle and credit rating, may be your only option.
Next Steps: Discuss Your Situation with a Professional
For more details about Orderly Payment of Debts, and the other insolvency solutions discussed in this article, please contact us now for a free, confidential consultation with a Licensed Insolvency Trustee. The Trustee will be happy to review your situation with you and help you decide the best possible course of action. Your first appointment is free.
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