Is a Consumer Proposal Right for You?

April 19th, 2021
Is a Consumer Proposal Right for You?

man signing papers

If you’ve been struggling with debt management and you’ve been feeling overwhelmed with all the loans you have to repay, you should consider filing a Consumer Proposal. It helps you manage your debt by enabling you to negotiate with your unsecured creditors to make a new payment arrangement and often settle for a percentage of the total debt owed. If the majority of your creditors accept the Consumer Proposal, it becomes legally binding on all unsecured creditors, helping you relieve the burdens of  your debt management struggles and from feeling overwhelmed.

However, a Consumer Proposal may not be a solution for everyone having difficulties repaying their loans, especially if they’re in a challenging situation. It involves a legal process that you must file with a Licensed Insolvency Trustee who administers the Consumer Proposal. They are responsible for explaining the technical requirements and reasons to pursue a consumer proposal and determine if it’s appropriate for you.

Here’s what you need to know about consumer proposals:

Eligibility Requirements of Filing a Consumer Proposal

To determine if you can file a Consumer Proposal, you’ll need to fulfill the legal requirements. The Bankruptcy & Insolvency Act explains them to be the following:

  • To be eligible to file a Consumer Proposal in Canada, you must be an individual and reside, do business, or own property in the country.
  • You must be insolvent, which means you’ve either stopped paying your debts as they are due, are unable to pay your debts when they are due, or your assets are valued less than your unsecured debts.
  • Your debt must be more than $1,000 and less than $250,000, unless it is a joint Consumer Proposal. The mortgage debt you owe to your primary residence is not included in this estimate. If your debt surpasses this limit, you are still eligible to file a Division I proposal which will also provide for relief from your creditors.
  • If you are bankrupt, you can file a consumer proposal, although its effective date is the date of bankruptcy. Any debt incurred after your date of bankruptcy will not be included.
  • If the debts of the individuals are essentially the same, you are eligible to file a consumer proposal.

The Types of Debts Required to File a Proposal

A Consumer Proposal enables you to settle and combine your unsecured debts, including credit card debts, unsecured loans or lines of credit, debt owed to CRA, payday loans, and outstanding bill payments. You can also consolidate government student loans if you have been out of school for seven years or more.

Although very rare, some debts cannot be discharged; like court fines, penalties, or debts due to fraud. While they do not disqualify you from filing a proposal, they’ll remain outstanding after completion and you will have to pay them in full.

Is Filing a Consumer Proposal the Right Option for You?

Depending on your situation, a Consumer Proposal will help you find relief from all types of debts through a new legally binding agreement that on your creditors. Many people file Consumer Proposals for the following reasons;  they may have assets that they would lose when filing for personal bankruptcy;  They earn a high income that may provoke a surplus income penalty in a bankruptcy or make the bankruptcy process longer;  They can’t make minimum payments on all their debts individually.

If you’re struggling to maintain minimum payments with various creditors and can’t get ahead, you have options to regain control of your finances.

A Consumer Proposal can offer much-needed debt relief and a plan to move forward and improve your situation. The Consumer Proposal will allow you to stop the interest, make new payment terms and often will allow you to pay your creditors less than what you owe them. The Consumer Proposal will also allow you to protect and keep assets that would not have been protected in a bankruptcy,  such as high equity in your home, RESP funds or multiple vehicles.

Conclusion

A Consumer Proposal can be a great solution to debt problems and will provide relief from debt for those who do them. If you want to avoid filing for bankruptcy, or perhaps a second bankruptcy in London and want to protect ownership of your assets, filing a Consumer Proposal will provide you with a legislative and legally binding option and way out. It allows you to settle with your creditors, avoid expensive interest and penalties, and work towards a financially stable situation by becoming debt-free.

If you’re looking for ways to find debt relief, contact us at Paul J. Pickering and Associates Limited! We offer credit counselling, Consumer Proposals and Bankruptcies in London, Ontario, and also help Canadians learn debt management skills and enjoy a fresh start with their finances. Contact us today to start solving your debt problems!

If you’ve been struggling with debt management and you’ve been feeling overwhelmed with all the loans you have to repay, you should consider filing a Consumer Proposal. It helps you manage your debt by enabling you to negotiate with your unsecured creditors to make a new payment arrangement and often settle for a percentage of the total debt owed. If the majority of your creditors accept the Consumer Proposal, it becomes legally binding on all unsecured creditors, helping you relieve the burdens of your debt management struggles and from feeling overwhelmed.

However, a Consumer Proposal may not be a solution for everyone having difficulties repaying their loans, especially if they’re in a challenging situation. It involves a legal process that you must file with a Licensed Insolvency Trustee who administers the Consumer Proposal. They are responsible for explaining the technical requirements and reasons to pursue a consumer proposal and determine if it’s appropriate for you.

Here’s what you need to know about consumer proposals:

Eligibility Requirements of Filing a Consumer Proposal

To determine if you can file a Consumer Proposal, you’ll need to fulfill the legal requirements. The Bankruptcy & Insolvency Act explains them to be the following:

  • To be eligible to file a Consumer Proposal in Canada, you must be an individual and reside, do business, or own property in the country.
  • You must be insolvent, which means you’ve either stopped paying your debts as they are due, are unable to pay your debts when they are due, or your assets are valued less than your unsecured debts.
  • Your debt must be more than $1,000 and less than $250,000, unless it is a joint Consumer Proposal. The mortgage debt you owe to your primary residence is not included in this estimate. If your debt surpasses this limit, you are still eligible to file a Division I proposal which will also provide for relief from your creditors.
  • If you are bankrupt, you can file a consumer proposal, although its effective date is the date of bankruptcy. Any debt incurred after your date of bankruptcy will not be included.
  • If the debts of the individuals are essentially the same, you are eligible to file a consumer proposal.

The Types of Debts Required to File a Proposal

A Consumer Proposal enables you to settle and combine your unsecured debts, including credit card debts, unsecured loans or lines of credit, debt owed to CRA, payday loans, and outstanding bill payments. You can also consolidate government student loans if you have been out of school for seven years or more.

Although very rare, some debts cannot be discharged; like court fines, penalties, or debts due to fraud. While they do not disqualify you from filing a proposal, they’ll remain outstanding after completion and you will have to pay them in full.

Is Filing a Consumer Proposal the Right Option for You?

Depending on your situation, a Consumer Proposal will help you find relief from all types of debts through a new legally binding agreement that on your creditors. Many people file Consumer Proposals for the following reasons;  they may have assets that they would lose when filing for personal bankruptcy;  They earn a high income that may provoke a surplus income penalty in a bankruptcy or make the bankruptcy process longer;  They can’t make minimum payments on all their debts individually.

If you’re struggling to maintain minimum payments with various creditors and can’t get ahead, you have options to regain control of your finances.

A Consumer Proposal can offer much-needed debt relief and a plan to move forward and improve your situation. The Consumer Proposal will allow you to stop the interest, make new payment terms and often will allow you to pay your creditors less than what you owe them. The Consumer Proposal will also allow you to protect and keep assets that would not have been protected in a bankruptcy,  such as high equity in your home, RESP funds or multiple vehicles.

Conclusion

A Consumer Proposal can be a great solution to debt problems and will provide relief from debt for those who do them. If you want to avoid filing for bankruptcy, or perhaps a second bankruptcy in London and want to protect ownership of your assets, filing a Consumer Proposal will provide you with a legislative and legally binding option and way out. It allows you to settle with your creditors, avoid expensive interest and penalties, and work towards a financially stable situation by becoming debt-free.

If you’re looking for ways to find debt relief, contact us at Paul J. Pickering and Associates Limited! We offer credit counselling, Consumer Proposals and Bankruptcies in London, Ontario, and also help Canadians learn debt management skills and enjoy a fresh start with their finances. Contact us today to start solving your debt problems!