If you’re in financial difficulty, you might not be aware of all the options you have. Filing a consumer proposal in Toronto to your creditors is one of them. Not a lot of people have heard about consumer proposals and even fewer know what they are.
What is a Consumer Proposal?
A consumer proposal is essentially a plan that you make with your creditors to pay them back at your own pace over a set period of time. If you feel that you can pay back a portion or all of the money you owe, but you just need more time, a consumer proposal may be a great alternative to bankruptcy.
Why would you file a consumer proposal? Because you can:
- keep your assets like your home or car
- reduce your monthly payments
- settle your unsecured debts for less than you owe
- get immediate protection from your creditors
- stop all legal action including collections and wage garnishments
- avoid bankruptcy
How Does The Process Work?
We start the consumer proposal process by determining how much you can afford to pay back every month, taking into consideration things like living expenses and your income. That amount will determine how long your consumer proposal will last (we can arrange a payment plan of up to five years). Remember: you repay what you can afford. In most consumer proposals you pay back between 25% and 100% of what you owe.
Is it that easy? A consumer proposal is just that – a proposal. Your creditors have to accept the deal. Your creditors have 45 days to vote for or against your proposal, but the odds are still in your favour – you only have to get a simple majority to agree (50%+1 based on the dollars you owe) for the proposal to be accepted by all your creditors, even those who voted no. After that, if no one objects in the 15 days following the acceptance, your proposal will be approved by the court, and you and your creditors, and you, are officially committed to that plan.
What if they do vote no? If a majority of your creditors do vote against your consumer proposal, we will call a meeting with you and your creditors to help you negotiate a deal that is acceptable.
What happens to your debt? After the deal is worked out, you are only committed to paying back what you have agreed to. For that time, all calls from creditors will stop and any garnishment of your wages will also cease. And even better news is the debts will be frozen, meaning no more interest can be accumulated.
How We Can Help
As a trustee in bankruptcy, we can act as your consumer proposal administrator. We will file your proposal, negotiate on your behalf with your creditors, oversee your proposal and deal with calls from your creditors. You will also receive credit counselling sessions as part of your consumer proposal process where you will learn useful money management skills to help you build a stronger financial future. Once your proposal is complete, we will provide you with your Certificate of Completion which will legally release you from the debts covered in your proposal.
A consumer proposal may or may not be for you, but if you are in financial difficulty you have to remember that there are options available. Call the Bankruptcy Toronto and Consumer Proposal team at 310-PLAN for more information and to set up a free consultation. You can also contact us through our online evaluation form and ask any questions you might have about consumer proposals. The best way to deal with your debt problems is to have a plan – let’s make one together.