A consumer proposal is a contract that you make with your creditors to repay what you can afford to pay when you find that you are unable to pay your debts in the normal course. The payment schedule that is created in consultation with a Licensed Insolvency Trustee is based on your income, living expenses and family responsibilities.
These questions and answers provide a brief summary of the most common questions asked. However, these questions do not address all the issues that may be applicable to your specific situation. Further questions can be answered by contacting Paul J. Pickering and Associates Limited, Licensed Insolvency Trustee.
If your debts are less than the prescribed limit (presently $250,000), you may make a consumer proposal. A home mortgage is not included in the calculations of this limit.
A proposal can:
Your creditors are likely to accept your proposal if it is reasonable. If most of your creditors or the Court do not feel that your proposal is reasonable, they may refuse it and you will need to consider other options.
If at least 25% of the dollar value of the claims filed in your proposal refuses the proposal and request a meeting to be held, you will be required to attend a meeting of your creditors in order to work out a suitable arrangement. This meeting is usually held in the Trustee’s office. In order to obtain your Certificate of Full Performance, you must also attend two financial counselling sessions.
No. The Bankruptcy and Insolvency Act specifically forbids an employer from dismissing, suspending, or laying off an employee solely because the employee has filed a proposal.
No. A landlord cannot evict you or terminate your lease for rent owing when you file your proposal.
No. Your fuel, water, electricity, and telephone services cannot be disconnected for amounts that you owe at the time you file your proposal. However, the company providing the service is not obliged to give you credit in the future and may require that you make a cash deposit.
Your property does not belong to your creditors and would not be turned over to the Trustee. However, if you have pledged a specific asset such as a car, you may have to continue the usual payments or you may lose the asset.
Immediately. Your unsecured creditors (to whom you have not pledged specific assets) can do nothing to collect their accounts after you have filed a proposal. If your wages are presently being garnished, the proposal will, in most cases, stop the garnishee.
Shortly after you have signed the proposal documents, the Trustee will let your creditors know that you have filed a proposal and send them the details of the proposal. If creditors contact you between the time you sign the documents and the time they are notified of the proposal, you should refer them to the Trustee.
Yes. The Trustee, through financial counselling, will help you better manage your money so that you can meet the terms of your consumer proposal. Your new skills will also help you in future money management.
Your proposal can be changed with the approval of your creditors. If you stop making your payments and do not amend the proposal, the proposal is ended and your creditors can continue their proceedings against you. As a result, you will lose the protection that the proposal gave you against the actions of your creditors.
The fees paid to the Trustee are included in the payments made by you under the terms of the proposal. The fee is set by the Bankruptcy and Insolvency Act Rules and includes a preparation fee plus a percentage of the funds paid to your creditors.
No. Depending on your particular situation, other alternatives may be more appropriate. These options include:
All other options will be discussed in detail when you meet the Trustee.