Got Questions? We have Answers on Your Consumer Proposal in the GTA

What is a consumer proposal?

A consumer proposal is a legal process under the Bankruptcy and Insolvency Act that provides you with relief from the burden of your debts.

Who can file a consumer proposal?

A consumer proposal is available to an insolvent individual owing $250,000.00 or less. This does not include the mortgage on their principal residence. Only a Licensed Insolvency Trustee of consumer proposals can help you file a consumer proposal.

How much does a consumer proposal cost?

The trustee will do an assessment to determine what would be a fair offer for both you and your creditors. Usually a proposal will reduce your unsecured debt by 50-70%. However, each situation is unique and some proposals may reduce your debt even more.

How long is a consumer proposal?

The amount you offer to pay your creditors can be spread out over a maximum of 5 years. It is also possible to offer a lump sum payment (by selling an asset) rather than spreading the payments over a period of time. This type of proposal starts and finishes quickly.

At the end of your proposal you are legally discharged from your debts including income tax, payday loans, and student loans (if you ceased to be a student seven or more years prior to filing). It is important to note that some debts, like child support and traffic tickets, must still be paid by you.

What assets will I lose in a consumer proposal?

The administrator cannot seize or sell your assets in a proposal. However, the value of your assets is considered in determining what you should pay your creditors. Furthermore, if you want to keep your house or car you can continue to pay your mortgage/car loan under the terms of your agreement with the lender. If there is equity in the house or car, then the value of that equity is taken into consideration when determining what you should pay.

Will wage garnishment and harassing phone calls stop?

Yes. Once you have decided the terms of your proposal, it is formally presented to your creditors and they must stop all action against you and deal directly with the trustee.

What happens once the consumer proposal is sent to my creditors?

The creditors vote on whether or not to accept the proposal. If the majority of your unsecured creditors vote to accept the terms you have offered, it is legally binding on all of them. You make the agreed payment to the administrator of the proposal who will distribute the money to themselves and your creditors.

What happens if I miss a payment under my consumer proposal?

If you miss too many payments the proposal is deemed annulled and the protection afforded to you under the proposal is lifted. If your proposal is annulled, your creditors can start collecting from you again. For this reason, a consumer proposal is usually only filed if you have a sufficient and stable source of income, otherwise a bankruptcy may be a better alternative.

What else do I have to do in a consumer proposal?

During your proposal you will need to attend two financial counselling sessions. You may also be required to attend a meeting with your creditors or an examination under oath – although this is unlikely.

How do I know if a consumer proposal is right for me?

A consumer proposal is a good option if:


  • You have a stable source of income
  • You have the ability to repay a portion of what is owing to your creditors - generally 20-50%
  • You have assets that you might lose if you filed for bankruptcy
  • You need to stop wage garnishment

Are student loans covered by a proposal or bankruptcy?

If you finished school within seven years of filing a consumer proposal or bankruptcy then the loan is not released (or discharged).
While you’re going through your proposal or bankruptcy you are not required to make payment to your student loans (be aware that interest may still accrue). If your student loans survive your proposal or bankruptcy and you are still experiencing financial difficulty, you can apply to the bankruptcy court to get your student loans discharged.

If you would like to learn more about consumer proposals please contact us today. We are eager to help you recover your financials.

Information

Yanch Dey & Associates Ltd.

215 Simcoe St N.

Oshawa, ON Canada

L1G 4T1

Oshawa:  905‑721‑7506

Ajax: 905‑427‑6647

Email: help@burtondey.com

Hours

Monday - Friday 09:00 AM - 05:00 PM

Saturday & Sunday By Appointment

Evenings by appointment

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