Consumer Proposal in Ontario
The Consumer Proposal
A consumer proposal in Ontario is a tool for those who would like to pay off debt. It will offer the creditors the repayment of your debt but at terms that will be more favorable to you, the person who owes them money.
By negotiating these new terms, a debtor can take control of their financial situation while offering creditors a guarantee of repayment, even if it may not be the total amount originally owed. It’s a compromise that can benefit both parties as it allows the debtor to avoid bankruptcy, which could result in creditors receiving even less and the debtor losing more assets.
It is used to reduce or eliminate interest payments, reduce the loan balance, or extend the repayment duration, and it can make the path to becoming debt-free more manageable. However, professional guidance from a Licensed Insolvency Trustee is essential to ensure a successful and legally compliant consumer proposal.
- Stop Wage Garnishment
- Stop Lawsuits
- Stop Creditors from Calling You
What Exactly Is A Consumer Proposal after all?
A consumer proposal is a formal offer to your creditors. It shows that you want to honor your obligation to pay the debt, especially before it becomes unmanageable. However, you need some leeway to accomplish this.
Your proposal will be based on your ability to pay, not necessarily the amount you owe, showing your commitment to rectifying the situation rather than allowing it to worsen. It’s not just an appeal for more comfortable terms but a declaration of your financial position and a plea for a more feasible debt repayment strategy. This step can provide a significant reprieve and a chance for a fresh start without the weight of unmanageable debt.
Eligibility: Who Can File a Consumer Proposal?
To be eligible to submit a consumer proposal in Canada, you must meet the following criteria set forth by the federal government regulation.
- You need to have the resources to make at least some of your debt payments;
- To be insolvent, either your debts exceed your assets or you are unable to complete your regular debt payments on time;
- You can’t owe more than $250,000 in unsecured debt (not including your mortgage);
- You need to either legally reside in Canada or own Canadian real estate.
A consumer proposal can be filed by anyone, regardless of citizenship status. There are a variety of immigration statuses that allow you to live and work in Canada, from permanent resident to temporary worker. Consumer proposals are available to anyone, including immigrants seeking a way to settle financial obligations.
A consumer proposal could be an option if your monthly surplus income is high enough and you want to avoid bankruptcy. It will help you stay afloat financially even if you reduce your debt’s interest rate.
Who Can File A Consumer Proposal For You?
Only a Licensed Insolvency Trustee (LIT) can develop a consumer proposal in Ontario. It is a formal offer that is binding on both you and the creditor and is administered by the LIT. Usually, it consists of an offer to pay the creditors a percentage of the balance, to extend the time to pay, or both. It is limited to five years. You make the payments through the LIT, who, in turn, sends the money to your creditors. By engaging a Licensed Insolvency Trustee (LIT), you can often reduce your total debt load to a fraction of what you owe by having them negotiate more favourable terms with your creditors.
Is A Consumer Proposal Right For You?
Not necessarily. If you owe less than $1,000 or over $250,000, it is unlikely that you will fall under the qualifications. However, mortgage debt, and other exclusions, may make you a viable candidate. In order to decide if you qualify and if the action is appropriate for your circumstances, contact a Licensed Insolvency Trustee. These professionals are uniquely equipped to evaluate your financial situation in detail, considering your income, debts, and living expenses. Their role extends beyond mere qualification assessment; they can also help you understand if a consumer proposal is the best course of action given your circumstances. A LIT can guide you through the potential implications on your credit report, the effect on your assets, and the overall impact on your financial future.
Contact our office for more detailed information about this process and your situation.
Bankruptcy is not your only option
Bankruptcy is not the only solution when you are in financial difficulties. Canada offers a number of options; among them is the Consumer Proposal. However, that is not the only alternative.
In order to determine the best course of action, you should arrange an appointment with one of our accredited debt counsellors. You can handle this over the phone, video conference or in person.
It is free, and you are under no obligation to proceed. All of our meetings are completely confidential and we in no way judge your actions.
Why File a Consumer Proposal? Is it Better Than Bankruptcy?
Many people with financial issues believe that declaring bankruptcy is their only option to meet debt obligations. But that’s not true; there are other ways to become financially stable, one of which is to submit a consumer proposal.
When all other debt consolidation methods have failed, consumers can turn to consumer proposals for help. Considering the circumstances, you might not be able to afford a debt management plan, and a debt consolidation loan may not be an option for you. A consumer proposal typically has the lowest costs associated with resolving consumer debt.
If you’re having trouble keeping up with your bills and are in danger of going bankrupt, a consumer proposal may be your best option.
What Comes After Filing a Consumer Proposal?
Financial matters can always be a little daunting to tackle, and when filing a consumer proposal, there is always the question of “What happens next?”
All court actions are halted as soon as the Consumer Proposal is submitted. This precludes any collection efforts for unsecured debts from being initiated or continued by creditors. A consumer proposal is a revised agreement between the debtor and their unsecured creditors that allows for a reduced payment. The consumer then makes the agreed-upon payments to the Licenced Insolvency Trustee’s office for the duration of the consumer proposal once the creditors have agreed to the new payment arrangement. During the consumer proposal, the individual must participate in two financial counselling sessions focused on budgeting, goal-setting, and achieving financial stability.
Articles we prepared on Consumer Proposals in Ontario
Can you file twice for a consumer proposal in Waterloo?
You may have previously cleared debt by filing a consumer proposal in Waterloo and have again found yourself in another debt that requires you to file another consumer proposal to pay it off. When you find yourself needing another consumer proposal to pay off debt...
Home Equity Loans VS Consumer Proposals
Introduction You might be hoping for a way to consolidate your debt if you are struggling with credit card debt or paying multiple loans every month. A home equity loan might be the best option for you. Although there are various uses to home equity loans, homeowners...
Are you a home owner or a tenant ? Dealing with debts during COVID-19 pandemic
Introduction The COVID-19 pandemic has created turmoil in people's lives for a long time. The real estate industry is no exception. Owning or renting a home can be an expensive undertaking during this pandemic. Other than the initial down payment, when you own a...
Consumer Proposals vs Personal Bankruptcy: Which is better?
Introduction Most citizens file for personal bankruptcy or consumer proposals in Canada, making them the best insolvency options for a person facing financial troubles. Consumer Proposals and Personal Bankruptcies are under the Bankruptcy and Insolvency Act. Each of...
Are you worried about your Credit Card Debt? Stay debt-free with these eight simple rules
Many customers struggle with credit card debt. Although getting yourself out of credit card debt can be challenging, it is possible. It just takes focus, proper guidance, determination, and a plan that works with your financial situation. Here are some simple rules to...
Are you dealing with Debt problems? Solutions are here.
Debt Problems: Introduction Debt problems are not always sudden. Even so, it's a fact that financial difficulties can arise suddenly and unexpectedly, like the loss of a job or a vehicle breakdown. Debt problems can be of all sizes, from being a few hundred dollars...
Mortgage deferments are almost up: A financial wake-up call.
COVID-19 struck at the beginning of 2020, devastating millions of Canadians and reducing their income significantly. Renters struggled to pay their rent, while homeowners were worried about meeting their mortgage payments. The Canadian government made efforts to...
A list of alternatives to CERB repayment if you cannot pay it back
A list of alternatives to CERB repayment if you cannot pay it back What is CERB? COVID-19 has caused a great deal of economic stress all over the world. Amid this pandemic, a financial support program called CERB - Canada Emergency Response Benefit was introduced in...
What you should not do to pay your Consumer Proposal faster
You may be wondering what you can do to pay off your consumer proposal faster. You don't want to make any mistakes that will cost you more money or cause your debt to grow even more significant than it already is. The following blog post will discuss the things not to...
The benefits and disadvantages of paying a consumer proposal faster
A consumer proposal is a legal document that allows individuals to repay their debts over time while avoiding bankruptcy. If you consider paying off your debt with a consumer proposal, there are benefits and disadvantages to consider before taking this step. To make...