Common Questions

4 Pillars handles both individuals and families of all sizes who:

• Cannot meet their monthly minimum service payments of $10,000 or more of unsecured debt.
• Prefer to avoid bankruptcy.
• Have available cash flow to warrant a repayment schedule (at 0% interest) over a 36 to 48 month period.
• Would like to relieve stress, reduce debt and take control of their finances.

Anyone who finds themselves in the situation listed above is in a position for debt restructuring. If you'd like to get started, take our Free Assessment.

Debt restructuring is the best solution for resolving your financial problems in the event that you are unable to pay your bills. Working for the client and not the creditor, 4 Pillars negotiates the best possible restructuring scenario. We also find a way to cease harassing calls from creditors while client situations are being resolved. It is possible to arrange for protection from creditors during this process.

Different restructuring options have different effects on your credit rating. As a general rule any time you settle your debts at less than 100 cents on the dollar it will have a negative effect on your credit rating. For many, the question that must be asked is: is it worth it to take a hit on your credit rating to avoid paying back the money you owe? Any debts included in a Bankruptcy will show up on your credit bureau as an R9 (Bad debt; placed for collection; moved without giving a new address) while debts settled through an Informal Proposal appear as an R7 (Making regular payments through a special arrangement to settle debts).

The only way a person can rebuild their credit is to obtain new credit and then use it responsibly. The ability for a debtor to rebuild their credit after debt restructuring will depend on many factors. For instance, it will depend on what type of debt restructuring the debtor has done as some are more damaging to a person's credit report than others. Some types of debt restructuring can have the debtor start almost immediately while others cannot begin for up to 36 months.

It will also depend on how diligent a person is on reestablishing their credit rating and whether you have someone who is familiar with the credit system assisting you in ensuring you are doing the right credit rebuilding activities at the right time.

If you had a credit rebuilding plan and followed the steps it should take a debtor about 2 to 4 years to rebuild their credit.

We handle nearly every kind of debt imaginable, including credit card debt, bad loans, leases, mortgages and more.

If the best plan of action for your case includes a Trustee, you would make payments directly to the Trustee who would then file and distribute the funds to your creditors on a pro-rata basis. If a Trustee is not required for your case, upon successful settlement of each debt, payments would be made directly to the creditor - either by yourself or those assisting in the settlement process.

We have found in the past that debtors who try to negotiate on their own debts through Informal Proposals don't always understand the process and in many cases find that although they thought they had settled their debts now owe the unpaid balance. There is no guarantee that a creditor will not pursue legal action against a debtor while in negotiations but this process is very rare. In most cases the creditors will work through the negotiation process first before considering legal action. If a lump sum payment is accepted and the proper paper work for the Informal Proposal is processed they cannot come back to pursue the debtors assets.

The type of income a debtor receives does not limit the ability for debtors to carry out different restructuring options. In all cases, regardless of how a debtor feels, it's about looking at all of the options available and then having the debtor choose the option that they feel works best for them based on their current circumstances.

This largely depends on the type of restructuring used. If you file into Bankruptcy, as a requirement of the Bankruptcy you must give up all forms of credit. A Consumer Proposal only deals with unsecured debt with a positive balance - meaning if you have a credit card with a zero balance and you do not have other debts with this institution it would not be included in the proposal, and could possibly be free for use as a credit rebuilding tool after the Consumer Proposal has passed. With Informal Proposals you have the option to deal with each debt individually, so cards which are not included in the restructuring would be free for you to retain.

Making the decision to restructure can be a difficult one for some people. In this business "you can't have your cake and eat it too", which means that if you choose to deal with your creditors and stop living paycheck to paycheck the trade off is you will most likely take a substantial hit on your credit rating. Anytime you offer up less than 100% of your debt owed it will have a negative effect on your credit rating. Choosing to restructure means you should consider all your options and then make a choice based on options available and the best one for you. One option for some to consider with good credit is to consider a consolidation loan that protects your credit rating but be sure you don't have any other underlying spending issues and a solid budget to follow.

As a general rule if you pay less than 100% of the balance owing to a creditor it will have a negative effect on your credit rating. In many cases it has been our experience that many debtors already have tarnished credit ratings before considering their options and seeking assistance to deal with their financial situation. There are 3 factors that affect the ability for someone to obtain a mortgage: credit rating, employment income, and the down payment. Most lending institutions use the Beacon Score to evaluate the debtors capability to obtain mortgages. Typically a Beacon Score of 650 or higher means a debtor can qualify without too many restrictions.

If you do have a large loan that is secured against your house you should verify by obtaining a residential property search that can be conducted in every province in Canada. The fee is normally around $30 for such a service but it will list your residential home and any loans that are currently registered against if. If the loan is secure then it cannot be included in a Consumer Proposal as these are only capable of dealing with unsecured debts.

If an individual debtor files for protection from their creditors in either a Bankruptcy or a Consumer Proposal then all the assets of the debtor and any joint assets must be listed in the documentation. In addition, for the purposes of preparing a Consumer Proposal the incomes of both the debtor and his or her spouse must be listed.

The spouse of a person who is in financial trouble does not have to be part of the process but certain aspects of their joint life must be disclosed as part of the process. This would include all assets that are considered "joint assets" where both names appear to own it, joint liabilities where both names are responsible for the debt and the combined income of the family. In most cases the spouses name may appear on the documents but he or she would generally not be required to meet with the Trustee, creditors (if applicable) or attend any meetings. In addition, nothing would appear on his or her credit rating except the history of any joint debts affected by the restructuring. In some cases the spouse then becomes 100% financial responsible of the joint debt once the person in trouble has settled with his creditors but this depends on whom the creditors are.

A person cannot be held responsible for someone else's debt unless they have done the following:

1. Both parties have signed for the credit card as a co-applicant
2. The principle card holder has requested a supplement credit card for the spouse

If the spouse or common law partner does have a supplement credit card then we commonly use this questionnaire to determine if a supplement card holder is responsible for the debt:

1. Does the credit card statement come in one name or both names?
2. Does the spouse have a supplement credit card, if so, has it ever been used?
3. Did both people sign up for the credit card as co-applicants?

Obviously, the more times you answer "Yes" the more likely you are to be responsible for the debt. It is important to note that there are "no hard fast rules" as some creditors will pursue supplement credit card holders while other creditors will not. In many cases it is as important to know who the creditor is as the outcome of the questionnaire.

Depending on the age of the student loan (you must be out of school for the past 7 years) and Canada Revenue agency debt, (it must be either personal taxes or Director Liabilities) they can be included in different restructuring options. Certain types of debts may not be included in restructuring but these are considered and reviewed on a case by case basis.

It depends on the age of the student loan. If it has been longer than 7 years since the last time you attended school then it is considered unsecured and therefore can be included in a Consumer Proposal or Bankruptcy. If the time is less than 7 years then it is protected by laws that protect the student loans from being included.

This will depend on what type of student loan you are planning to apply for and the severity of the type of restructuring you do.

Our fees are based on a couple of factors:

• Time involved working on your case
• Number and type of creditors involved in your case
• Severity of your financial situation
• The amount of money we can save you

We have successfully helped restructure the debts of over 8000 clients, with settlements averaging 25% of original debts owed. Most of our clients are honorable debtors who have chosen to show some restitution to creditors, thus avoiding bankruptcy.

An Informal Proposal involved negotiating settlements outside of the Court System with creditors in order to arrive at a suitable repayment plan that accommodates the current financial situation of the client. 4 Pillars is able to frequently settle debts at less than 50% of original debt owed by way of a lump sum proposal. Informal Proposals are the best option for clients that have only two to five creditors and access to a small pool of cash.

A Consumer Proposal is a legal process that allows a debtor, insolvent person, or business an opportunity to settle debts without filing for bankruptcy. The Consumer Proposal stops Judgments and Garnishments and allows for the repayment of debts as though they had been consolidated with a loan. This process is interest free and the client may pay less than what is actually owed. The balance of debts are forgiven and reported to the Credit Bureau as "paid in full".

A Consumer Proposal may be filed jointly if the client is married or living in a common-law situation and both parties signed together on the majority of the debt.

To learn more about Consumer Proposals, we suggest reading "Dealing with Debt: A Consumer Guide" published by the Office for the Superintendent of Bankruptcy. For additional information regarding this process, click here for details.