What is a Consumer Proposal?
What is a consumer proposal?
Are you able to make payments to your creditors but due to the revolving interest you never seem to get ahead? A consumer proposal may be right for you! A consumer proposal is a legal arrangement with your creditors, that if accepted, replaces the way they expect to get paid. It stops the interest and can even compromise the debt so you don’t have to pay it in full. It is a legal deal to your creditors guided by the Canadian Bankruptcy and Insolvency Act (BIA) and administered by a Licensed Insolvency Trustee.
Will I qualify for a consumer proposal?
You must owe less than $250,000 of debt (excluding the mortgage on your home) to be eligible for a consumer proposal.
How do I start a consumer proposal?
It begins by meeting a Licensed Insolvency Trustee for a free consultation. Be wary. There are debt management companies out there that say they “work with trustees” and will charge a fee upfront. You will not pay to meet with us . Our consult is free and no obligation.
We meet with you and ask you a lot of questions about your debts, income and financial situation. The first meeting is basically a fact-finding mission for us both. After analysing the information, the trustee will recommend if a consumer proposal is right for you. The trustee helps you create a deal to your creditors that will be good for you and likely be accepted. You may want to offer a compromise for the total amount of your debt or ask for an extension on time you need to pay your debts in full. You could also choose to cash certain assets to pay a portion or all of your debts rather than dealing with monthly payments. The creditors vote on your deal.
Will the creditor calls stop?
When the papers are signed and e-filed with the Federal government, a protection is in place called a Stay of Proceedings. This stopping of actions will halt all creditor calls, interest and payments while the proposal is being voted on by your creditors.
When will I know if my deal is accepted?
The creditors have 45 days to vote to accept or reject your offer. The trustee will keep you advised if they hear sooner. After the creditors accept the deal, we must wait another 15 days for the Court to approve the deal.
Do I still pay my usual payments during this time?
No. The proposal offer has replaced the old payment scheme.
How do I pay my proposal payments?
The Licensed Insolvency Trustee is the administrator of the monies as a Court officer. We administer your funds and distribute them evenly to your creditors.
What if my proposal is rejected?
If the majority of your creditors or the court rejects your consumer proposal, you will have to start over. Your creditors’ rights are revived and the calls and garnishments may start again.
What happens if I cannot fulfill the terms of my proposal?
If you cannot meet the terms of your proposal, you may wish to amend them or your proposal will be annulled and your creditors are free to start legal action once more.
What happens once my proposal has been completed?
Once your proposal has been completed, you will receive a Certificate of Compliance as proof you complied with you deal.
How will the proposal affect my credit rating?
Because you are asking for assistance to deal with your debts, the credit bureaus report your consumer proposal 3 years after the proposal is completed.
These debt reduction solutions along with financial management counselling or insolvency counselling are intended to get you out and keep you out of debt. To learn more about your debt options, visit the OSB portal. We have offices in Dartmouth, Bedford, Kentville, and Enfield (non-resident) and serve clients in Greater Halifax, the Annapolis Valley, and Nova Scotia.
Talk to a trustee
Consultations are always free.