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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 calling Paul J. Pickering and Associates Limited, Licensed Insolvency Trustee.

What is a Consumer Proposal?

It is an agreement to pay something back to your creditors when you find that you are unable to pay your debts in the normal course. The payment schedule which is created in consultation with a Trustee is based on your income, living expenses & family responsibilities. Every Consumer Proposal is unique to the financial circumstances of each individual.

Who is eligible for a Proposal?

If you are unable to pay your creditors in full and your debts are less than $250,000 you may make a consumer proposal. A home mortgage is not included in the calculations of this limit.

How can a Proposal help me?

A proposal can:

  • Stop your creditors from pursuing you;
  • give you additional time you need to pay your debts;
  • reduce the total amount you must pay to your creditors;
  • stop further interest from being added to your debts.

Can my Proposal be refused?

Your creditors are likely to accept your proposal if it is reasonable. A vote against your Consumer Proposal does not guarantee that the Proposal is refused. If the majority of creditors by dollar value accept the Proposal, then the Proposal is deemed to be accepted. If the majority of your creditors do not feel that your proposal is reasonable they may refuse it and you will need to consider other options. Refusal by creditors does not automatically result in a bankruptcy.

What meetings do I have to attend?

Occasionally your creditors will request a meeting. If the creditors do request to meet with you, you are required to attend a meeting in order to work out a suitable arrangement. This meeting is usually held in the Trustee’s office. In order to fulfill your proposal, you must also attend two financial counselling sessions.

Could filing a Proposal cause me to lose my job?

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.

Can my landlord evict me or terminate my lease?

No. A landlord cannot evict you or terminate your lease for rent owing when you file your proposal.

Can my utilities be disconnected?

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.

Can I keep my personal possessions?

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.

When will the creditors stop pressuring me?

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 garnisheed, the proposal will, in most cases, stop the garnishee.

How will my creditors know I have filed a Proposal?

Shortly after you have signed the proposal documents, the Trustee will let your creditors know that you have filed a proposal & send them 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.

Will the Trustee assist me in meeting the terms of the Proposal?

Yes. The Trustee, through financial counselling will help you better manage your money so that you can meet the terms of your proposal. Your new skills will also help you in future money management.

What happens if I cannot make payments after I have started the Proposal?

Your proposal can be changed with the approval of your creditors. If you fail to make three payments over the period of your Consumer Proposal, the Trustee must inform the creditors that your Consumer Proposal is deemed annulled. As a result, you will lose the protection that the proposal gave you against the actions of your creditors.

What does a Proposal cost?

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 Rules and includes a preparation fee plus a percentage of the funds paid to your creditors. The creditors are fully aware these costs are included.

Is a proposal my only option?

No. Depending on your particular situation, other alternatives may be more appropriate. These options include:

  • consumer bankruptcy;
  • financial counselling; or
  • a debt consolidation loan.

All other options will be discussed in detail when you meet the Trustee. 

If you’d like to read more about consumer proposals and alternative options, see our valuable resources below:

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