How To Successfully File A Consumer Proposal
Ensuring Your Consumer Proposal Is Complete & Gets Approved
Financial difficulty is a huge stressor for many Canadians and filing a consumer proposal could be a consideration.
It happens frequently right across the country, for all kinds of reasons — job loss, illness, divorce — just to name a few.
If you’re bewildered by the idea of getting numerous creditors paid off but don’t want to declare bankruptcy, submitting a consumer proposal might be the right solution for you.
But what is a consumer proposal?
And how do you draft one that ensures acceptance by regulators?
Are they ever rejected?
Here we answer some of your most pressing questions about consumer proposals, such as exactly how they are defined, how they work, and how long they last.
At Bankruptcy Canada, our counsellors will sit down with you and help guide you through this process of writing and submitting your proposal to ensure its acceptance, but here is are the key aspects to keep in mind:
What Is a Consumer Proposal?
A consumer proposal is a legal, binding document between you and your creditors, an arrangement in “black & white” that all parties agree to, about payment of your debts.
Once complete, the proposal is sent to the government for approval, and your payments to creditors stop.
So do the relentless phone calls from collection agencies, and the letters demanding payment, and the rest of the constant reminders that you’re in too deep.
How Do I Qualify?
If you owe less than a quarter of a million (CDN) dollars ($250,000) in consumer debt, other than the mortgage on your primary residence, you qualify.
It has nothing to do with where you live or who you owe the money to — if you live in Canada and are a permanent resident, you qualify.
Is a Proposal “Better” Than Bankruptcy?
They are different beasts, and both have unique advantages.
A consumer proposal allows you to keep assets (like your home) whereas in a bankruptcy, that’s not always the case; sometimes you are compelled to sell to pay down the debt.
But entering into a consumer proposal doesn’t clear you of all debt, the way a bankruptcy does — you and your creditors agree on a set amount and each month you make a payment.
It stays on your credit report for six years.
How Much Do I Pay For a Consumer Proposal?
That depends on your creditors, your income, and what your budget can handle.
Most creditors are willing to enter into a consumer proposal because getting some money owed is better than getting none, which is what a bankruptcy means.
The creditors get to vote on whether they want to approve your proposal, but it is extremely rare in Canada to see one rejected.
The government collects the money each month and distributes it to each creditor, an agreed upon amount that varies depending on your circumstances.
Can I Pay Extra, Or Skip A Payment?
You cannot default on your proposal payments with serious consequences, but you can pay extra if, for example, you get an inheritance and want to pay it off early.
If you do, that information is added to your credit rating and report.
What Happens At The End?
Once your agreed upon debt is paid off, you will receive notice from your trustee or credit counsellor, like Bankruptcy Canada, and be told that you are no longer required to make payments — although most clients have this date firmly in mind.
Then, it’s up to you to begin rebuilding your credit rating and record, and avoid falling into the cycle again of owing more than you can handle.
How Can We Help?
At Bankruptcy Canada, we take you through the process of writing and submitting a consumer proposal that we practically guarantee will be accepted by your creditors.
We also ask that you complete two sessions of financial counselling with us, so we can help you avoid the “land mines” out there of big debt and not enough funds to go around.
Our clients find these meetings very helpful.
At Bankruptcy Canada, our staff is here to help you navigate what we know can seem like a daunting process.
We make sure that all the information you need is included in the proposal, so there are no delays or hiccups in the process.
We do this with knowledge of the system, and absolutely no judgement.
Let us help you come through these woes with dignity and respect, which all our clients are treated with, regardless of their financial situation.
If a consumer proposal is right for you, Bankruptcy Canada will help get yours done, submitted and approved as quickly and as painlessly as possible.
Then we’ll help you get on the road to financial recovery, so you can feel good about yourself — and your future — once again.