Is a Consumer Proposal Right for you?
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What is a consumer proposal?
A consumer proposal is an alternative to a bankruptcy. It is a debt relief option which allows you to make an offer to your unsecured creditors to settle the amount owed to them. The amount to be paid back is based on your income, assets, and total debt load.
This repayment schedule will provide for a reduction in the total amount owing, usually ranging from 50% to 75%. The time in which to pay back varies and can be no longer than five years. Once a consumer proposal is accepted by the creditors it is a legally binding contract between you and your unsecured creditors.
Am I eligible to make a consumer proposal?
As long as you owe less than $250,000 (this amount would exclude the mortgage on your home) you would be able to file a consumer proposal.
Should you owe more than $250,000, you would be required to file a Division 1 Proposal, which is another proceeding but the same concept as the consumer proposal.
What happens to my house, vehicle, RRSPs, RESPs ?
Once you file a consumer proposal, you will be able to maintain your home, car, and other assets that are important to you and your family. In order to determine your monthly payment the Licensed Insolvency Trustee will need to evaluate the value of your assets.
How will it help me?
Once you file a consumer proposal all interest charges, collection calls, wage garnishments and any legal action will stop. Since a Licensed Insolvency Trustee will act on your behalf, you do not need to contact or deal with your unsecured creditors directly.
Are all my debts eliminated when I file?
In most cases all unsecured debt will be eliminated by a consumer proposal, including Canada Revenue Agency debt. However, there are various debts that would not be eliminated and you would be responsible to maintain the payments. These debts would normally be any fine, penalty or restitution order made by the court, parking or speeding tickets, spousal or child support, any award for damages in respect of an assault, and student loans that are less than seven years old since your last study date.
What are my duties when filing a consumer proposal?
- Attend two mandatory counselling sessions within the required time frame;
- Make the required monthly payments;
- Keep your Licensed Insolvency Trustee informed of your current address and other contact information.
What will happen to my credit rating?
For a first time bankrupt, the bankruptcy will be on your credit report for seven years after your discharge. For a second time bankrupt, the bankruptcy will be on your credit report for fourteen years after your discharge. Even though it is on your credit report, our qualified counsellors will discuss with you the necessary steps to take in order for you to rebuild your credit history.
The bankruptcy ends (you receive a discharge) once the time frame has lapsed and you have completed your required duties. Once discharged, you will be released from the legal obligation to repay the debts that were included in the bankruptcy.
How do I get started?
Contact us to book an initial meeting to review your monthly income and expenses, your debt load and your assets. We will explain all of your duties and responsibilities. We are here for you throughout the entire process. When meeting with one of our experienced Licensed Insolvency Trustees they will make sure that the monthly amount being paid back is suitable and manageable to your financial situation.
We pride ourselves in being committed to making sure that each individual client understands the consumer proposal process. We want you to ask all the questions that are concerning you.
Paving the Road to Debt Freedom
Reduce Your Debt
A consumer proposal is a debt relief option which allows individual to consolidate their debts into one monthly interest free payment. It is a legal binding process between you and your creditors to repay a portion of what is owed. A Licensed Insolvency Trustee will negotiate with the creditors on your behalf to reduce the amount of debt owed. The amount of debt to be repaid is based on your income, assets and total debt load.
Restructure Your Debts
The debt consolidation loan option allows you to combine your debts into one loan with a lower interest rate. This option is available through a bank or a financial institution. In this option you would pay off the amount owing to your creditors in full while getting a new single monthly loan payment. Debt consolidation however will only reduce your interest payment and your overall amount owing is not reduced or eliminated.
Eliminate Your Debt
A Bankruptcy is a legal process that can be filed through a Licensed Insolvency Trustee. It is another debt relief option that can help individuals deal with their financial problems. In general, if you debt load is very high, your income is limited and you have no assets or minimal assets, then the bankruptcy option is likely the best course of action to follow.
Credit counselling is an option where you would be able to meet with one of our certified credit counsellors to discuss your fixed living expenses and required monthly bill payments. We would discuss strategies and techniques to help you better manage your monthly financial plan. This option does not reduce or eliminate your debt.
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