Must A Consumer Proposal Include All My Creditors?
Do I Have to List All of My Creditors in My Proposal?
Debt can feel like a debilitating problem that is always on your mind, but there are solutions to help you get out of debt and have a fresh financial start.
If you’re in debt, making a consumer proposal to creditors can give you this.
When looking to make a settlement offer to creditors, a consumer proposal offers legal protection, amongst other benefits.
This allows you to negotiate the payments you are required to make at the same time as keeping your assets, such as your home and investments.
This may be the smartest way to proceed if you have found yourself in financial difficulty and are unsure of how to proceed.
Creating A Consumer Proposal
There are certain rules you need to adhere to when creating a consumer proposal, one of them being which creditors you include in your proposal.
You are essentially making an arrangement to repay unsecured creditors a portion of what you owe them when you do this.
The law states that all unsecured creditors should be included.
This means that even friends and family that you owe money to should be included – no one creditor should be excluded from your proposal by law!
Why You Must Include All Of Your Creditors
You may find this a cause for concern, however, there’s a benefit to it.
A consumer proposal can give you a fresh start financially, so you will get the financial relief you need when including all of your creditors.
If you pick and choose which ones you include, you will likely not get adequate support.
The last thing you want is to do something like this, only to find yourself in continued financial difficulty afterwards.
The purpose of the consumer proposal is to eliminate your old unsecured debts so that you can live off your pay cheque without this weight on your shoulders.
Doing it properly, and including every one of your creditors is a must.
Student debt is included in a consumer proposal and will be forgiven if you have been out of school for over 7 years.
For those who have been out of school less than 7 years you will need the agreement of the student loan lender to have the debt cleared.
Of course, there are other debt solutions that may allow you to select which creditors to include.
For example, a debt management plan through a credit counselor will allow you to set up payments with specific creditors.
That being said, we regularly speak to people who are still experiencing financial issues after arranging this.
It’s important to note that the majority of payday loan lenders and the Canadian Revenue Agency won’t participate in these plans, so a consumer proposal is nearly always the better solution.
What Don’t Consumer Proposals Include?
It’s important to be aware of what consumer proposals do not include.
Consumer proposals do not include secured creditors, including your mortgage lender and car loan lender.
This is because you will likely still want to keep your assets going forward.
Secured creditors will receive notice that you have filed a consumer proposal but they do not vote or participate in any money distributed as part of the proposal.
What About Outstanding Payments And Bills?
It is possible for you to cancel certain agreements prior to filing your proposal, and anything you owe to the creditors will become a debt that is eliminated by the proposal.
This can be a good option for those who are struggling to keep up with their mortgage payments and believe that this is the source of their issues.
Some may choose to cancel their phone contract, gym membership, and other services.
If you leased a car, you can turn the car in prior to doing the proposal and these creditors will also be included in the proposal.
If you’re unsure of what you should do, but you know you need a solution to take this weight off your shoulders, get in touch with us today.
We can advise you on whether a consumer proposal is the right course of action for you to take, and help you to weigh up your options.
We look forward to helping you on your way to a fresh financial start.