A: A consumer proposal and bankruptcy give you a fresh financial start, but some differences exist.

• A consumer proposal has a debt limit of $250,000, whereas bankruptcy has no debt limit.
• With a consumer proposal, you pay a fixed amount each month to the LIT. But, bankruptcy payments vary depending on the “surplus income” each month.
• With a consumer proposal, you have a chance to keep assets. Bankruptcy involves selling some of your assets to repay debts.

The Licensed Insolvency Trustee receives a single monthly payment that includes all fees.

A: A consumer proposal involves any unsecured debt. That is any debt that does not have the backing of a physical asset, like a mortgage or car loan. It includes:- 

• Credit Cards
• Personal Loans
• Payday Loans
• Income Taxes
• Lines of Credit

A: Consumer proposals do not reduce mortgages or vehicle loans as these are secured debts with assets as collateral. If you cannot make those payments, the lender repossesses the asset for nonpayment. A student loan can be an inclusion if you have been out of school for more than seven years. If you file a consumer proposal for unsecured debt, you must continue to make a mortgage, and the lender repossesses car loan payments or those items. If you can hold the payments on your mortgage and vehicles, the consumer proposal does not affect them. Your LIT at Waterloo works with you to design a budget to accommodate all the monthly payments.

A: After the LIT negotiates with the creditors, you will agree to repay the agreed-to portion of the debt in writing. It involves fixed monthly payments for a specified term, usually three and five years. You make the same payment to the LIT, who then distributes the appropriate amounts to the creditors.

If you file a consumer proposal for unsecured debt, you must continue to make the mortgage, and the lender will repossess car loan payments or those items. If you can maintain the payments on your mortgage and vehicles, the consumer proposal will not affect them. Your LIT works with you to create a budget to accommodate all the monthly payments.

A: A consumer proposal has a maximum duration of five years, but your financial circumstances determine its term.

Your credit score will be rated R7, which implies that you have made a settlement with your creditors. Upon completion of the proposal, the rating remains for three years.

A: Your consumer proposal will only appear on your credit report. However, if you have joint debts, your spouse could be responsible for the total debt after filing a consumer proposal.

A: The co-signer becomes solely responsible for the debt repayment unless you file a joint consumer proposal.

A: To file a consumer proposal, you must submit all credit cards to your LIT. You will be unable to apply for a new card while making the consumer proposal payments, except for a prepaid or secured card.

A: Yes. After you file a consumer proposal, the collection agencies can no longer contact you.

A: Yes. After you file a consumer proposal, all legal actions end, including wage garnishments.

A: If you miss three payments, the consumer proposal becomes void, and you again are liable for all your debt.