A consumer proposal is a legal process administered by a Licensed Insolvency Trustee. It is a procedure available under the Bankruptcy and Insolvency Act which mean that, just like bankruptcy, a proposal provides legal protection from creditor actions. That means that a proposal is an effective way to stop collection calls and eliminate the debt that is causing those calls.
The legal protection is called a ‘Stay of Proceedings’. This stay is effective as soon as your paperwork is filed with the government. A stay of proceedings will:
- stop creditors from pursuing further legal action
- stop wage garnishments
- stop collection calls from creditors and their collection agents.
Collection agents are experts in collecting money; that’s their job. If you owe money, they will call, and send letters, and even use tactics that may not be ethical or legal in some provinces. This affects your personal, as well as your professional life. If you owe money, a collection agency is permitted to call your employer. This is generally to confirm your place of employment if they’re starting a legal process of getting your wages garnisheed.
Consumer proposals also provide you with legal protection from your creditors. This means that is you’re having your wages garnisheed, or receiving collection calls, those stop after filing your consumer proposal.
That’s right: by filing a consumer proposal you can stop collection calls.
How does it work?
Working with a consumer proposal administrator (who is a Licensed Insolvency Trustee) you will prepare an offer to your creditors.
For example, if your total debts are $50,000, you may offer to pay $400 per month for 60 months, or $24,000, in full satisfaction of your debts. The remaining balance is wiped out when your proposal is completed. The proposal must be approved by a majority of your creditors, and each creditor gets one vote per dollar owed to them.
Once your proposal is filed, your trustee will notify your creditors and send them a copy of the proposal.
The calls may not stop immediately. Creditors have processes in place to notify the correct department and it may take a few days for them to internally adjust their records. In addition, they may have to notify an outside collection agency if they are using one. However if you receive a call all you need to do is say “I have filed a consumer proposal”. Let them know who you trustee is. If they continue to call, contact your trustee and they will have a discussion with your creditor.
A consumer proposal is not the solution for everyone, but it may be a possible solution for you, so contact a consumer proposal administrator to arrange for a no charge initial consultation, and find out if you can finally stop those collection calls.