Learn how a voluntary deposit can protect you from certain kinds of garnishments.
Voluntary deposit is a program implemented by the government of Quebec that allows debtors (people who owe money) to go directly to the courthouse in their locality to propose an arrangement to their creditors. It is an alternative mechanism to debt consolidation, consumer proposals, and personal bankruptcy.
The characteristics of voluntary deposit
Here are some key characteristics of voluntary deposit in Quebec:
- Voluntary Nature: The debtor chooses of their own free will to make a voluntary deposit. It is not an obligation.
- Protection Against Creditors: Once enrolled in the program, the debtor is protected against legal actions from their creditors. For example, they cannot garnish their wages.
- Repayment Plan: The debtor pays a set amount every week, as determined by the person in charge of the program at the courthouse. This sum is then distributed proportionally among the creditors until 100% of the debts, plus an interest rate of 5%, are repaid. The amount to be paid is calculated based on the debtor’s income and family size but excludes certain debts, such as alimony or child support.
- Duration: The voluntary deposit program has no set duration. It continues as long as the debtor has not repaid all of their debts or decided to end it.
- Fees: The government takes a small portion of the payments to cover the program’s administration costs.
- Effects on Credit rating: Voluntary deposit has a negative impact on the debtor’s credit rating, similar to an account in collection or a bankruptcy.
- Exiting the Program: If a debtor decides to leave the program or fails to comply with the terms, their creditors can resume recovery procedures against them.
Unfortunately, with this program, you must repay all your debts, plus an interest rate of 5%, but you will have the same consequences on your credit file as bankruptcy. It thus carries all the disadvantages of a consumer proposal or bankruptcy, without the benefits. Additionally, if you work and your income is relatively high, the seizeable portion you must pay back may leave you with little room to meet your personal expenses and obligations.
To benefit from the voluntary deposit program, it is recommended to inquire at the clerk’s office of the courthouse in your locality or to consult the Quebec government’s website for detailed information and specific guidance or to contact us.
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