Consumer Proposal: 5 Things to Know



Consumer Proposals

If you are thinking about filing a consumer proposal there are 5 things you should know. 1. A Consumer Proposal is Court Approved Once it is filed, collection actives against you stop and any wage garnishments stop (with limited exceptions such as child support). If you deal with your debt through other methods such as credit counselling or debt settlement, the creditors can still continue court actions. 2. A Bankruptcy Trustee Must Administer a Consumer…


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Consumer Proposal Annulment A Law, Not A Policy



Consumer Proposals

A consumer proposal is a legally binding agreement between you and your creditors to settle your debt. Typically, the payments are scheduled as a monthly payment over a certain period of months. But what happens if you stop making payments? Your consumer proposal is annulled. The Bankruptcy and Insolvency Act is quite clear on what happens when payments are missed.  Section  66.31(1) states: …A consumer proposal is deemed to be annulled on (a) in the…


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Can Creditors Talk To One Another About My Proposal?



When you file a consumer proposal you make an offer to your creditors to pay a certain amount over time in exchange for which they agree to wipe out your debts. As part of the process each creditor receives information about your income, expenses, debts, assets and any recent asset transactions.  They review this information and make a decision on whether to accept or reject your proposal. Before they make a decision, a creditor may want to talk…


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Consumer Proposals Are Not A One Size Fits All Solution



Consumer Proposals

I have always known that when we meet with someone, we go into the process believing that a consumer proposal is unique to the individual. To emphasize the point, I decided to review 18 consumer proposals that have been filed in our Windsor & Leamington offices in a 60 day period to see just how different each scenario really is. It was an interesting exercise in which I confirmed that each proposal was as unique as…


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Can I File a Consumer Proposal if I Owe Canada Revenue Agency (“CRA”)?



Consumer Proposals

As a Windsor Ontario trustee I am meeting with more and more people who filed their income tax returns incorrectly and now owe Canada Revenue Agency (“CRA”) tens of thousands of dollars in penalties and interest. Many have hired lawyers to appeal the penalties and taxes, but that can be expensive, and success is not guaranteed. In fact, it appears that few appeals are successful. When someone comes to see me, I always ask for…


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Consumer Proposal Trustee Fees: How are they paid?



Consumer Proposals

When meeting with someone to discuss filing a consumer proposal, a common question is: How do you get paid? The answer is simple, the consumer proposal administrator fees are paid out of the consumer proposal. The government sets rules on how much trustee’s can get paid. The trustee is paid $1,500 + 20% of the money paid to the creditors. This amount is set by legislation and can’t be increased. It doesn’t matter which trustee…


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Joint Debts in a Consumer Proposal: 3 Things You Need to Know



Consumer Proposals

Joint and cosigned debts are very common.  Perhaps you and your spouse had a bank loan together, or maybe your parents cosigned your line of credit. What happens when one of the co-signors files a consumer proposal?  Here are 3 things you need to know. The debt isn’t split 50/50.  Both you are the co-signor are responsible for paying the entire debt.  If either of you fails to pay, the other is responsible for the…


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Consumer Proposal – 3 Rules in 3 Minutes



Consumer Proposals

There are 3 rules to having the greatest success in filing a proposal You must offer more than your creditors would get in a bankruptcy. Think about it this way. If in a bankruptcy your creditors would get 30 cents on the dollar, why would your creditors agree to a proposal of 20 cents on the dollar. Creditors generally want about one-third of their money back. You must be able to make the payment each…


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What is the Catch with a Consumer Proposal?



Consumer Proposals

When I meet with people in my Windsor Ontario office to explain how a consumer proposal works, a common question is “what is the catch”.  It doesn’t make sense that their creditors would be willing to accept less than full payment on their debt. Think of it this way.  If you aren’t able to make full payment on your debt your balance isn’t getting smaller. Maybe you aren’t even making your minimum payments. Your creditors have…


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What is this Government Program to Reduce Debt?



Consumer Proposals

We have all heard the radio ads, seen the TV commercials or the internet ad about a new government program available for a limited time to help Canadians reduce their debt. Remember that old saying “if it sounds too good to be true it probably is”? Well, you guessed it, there is no such government program. If there is, don’t you think the Canadian government would be promoting it and wouldn’t everyone be enrolled? After…


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