Who should consider voluntary deposit?
If you have employment income, voluntary deposit may be right for you.
If your debts are less than $10,000 and you have employment income, a voluntary deposit may also be an option to consider to settle your debts.
How does voluntary deposit work?
First, you will need to open a file at the provincial courthouse in your area. Then you can pay off your debt by making payments of 30% of your gross income until the debt is paid in full. This option also has its disadvantages, as creditors are entitled to interest on the unpaid balance. This is information that should be taken into account.
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The advantage of a voluntary deposit is that it is a way to settle your debts over a period of time that will depend on your income and the total amount of your debts. It is therefore really adapted to your situation. However, you should know that the consequences on your credit report are the same as for a bankruptcy.
This option is difficult to consider if your debts exceed $10,000. Is this the case? Perhaps it would be wise to contact one of our experts so that he can guide you in the most advantageous avenue for you.
Do you have any questions? We have the answers.
Does the voluntary deposit protect me from the recourse of my creditors?
Yes, voluntary deposits can protect you from creditors’ claims, but you must honour your commitment to pay the agreed amount every month.
Also, your creditors can challenge your voluntary filing if they believe your tax return is in error. Transparency tastes much better.
Are my payments tax deductible?
No, your payments are not tax deductible. In fact, your payments are determined according to your gross income minus an exemption based on the number of dependents.
If you are single and have no dependents, the exemption is $120. The exemption is an amount that is subtracted from your gross income before the 30% is calculated.
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