What Is A Consumer Proposal?

“I know, it’s where I call all my creditors and tell them that I don’t want to pay them anymore and they have to agree.” – NO.

“It’s where I make an offer to my creditors myself and they have to accept it.” – NOT QUITE.

“A consumer proposal is where I can choose who I want to pay and how much over a period of time.” – ALMOST.

These are all interpretations of a consumer proposal based on misread or misunderstood information by our clients.  Parts are correct, but let me give you the full explanation of what a consumer proposal is.

The Truth About Consumer Proposals

A consumer proposal is a legally binding offer to your creditors, filed through the federal government and administered only through a licensed Trustee’s office, like Hoyes, Michalos.

Who is eligible for a consumer proposal?

Anyone with debts under $250,000.00, not including mortgages and secured loans can file a consumer proposal.  You should have a steady stream of income in order to support the monthly payment you have offered to your creditors.  If you have a fluctuating income, it doesn’t mean you can’t file a bankruptcy, just means you will need to be more creative with your budgeting to ensure that in a high income month you have put aside some funds for your slower months on the job.  Your proposal will most likely last between three and five years but can be paid off at any time sooner with no penalty.

To formulate your proposal the Trustee must review all assets and surplus income obligations in a bankruptcy first in order to determine what must be offered in your consumer proposal.  The proposal must always allow for a greater realization to the creditors than what they would have received had you filed a bankruptcy instead.

What debts are included in a proposal?

Virtually all of your unsecured creditors will be included in your offer and once voted on and accepted by your creditors, all are bound to the proposal whether they voted yes, no, or chose not to vote at all.  Once the proposal is formulated by you with the help of your Trustee, your information and proposal is mailed out to all of the creditors who then have 45 days to send in their votes.  Each of your creditors are entitled to one vote for every dollar they’re owed, and you’re looking for 51% or more of your creditors votes accepting the proposal. Upon acceptance your payments will begin, and remember, you are no longer making any payments to your unsecured creditors so you should start to feel a difference in your cash flow going forward. Imagine having money left over at the end of the month……and your creditors are being taken care of!! Imagine no more calls or letters from collectors!! Imagine not worrying about any garnishments at work anymore!!!

How can I file a consumer proposal in Hamilton?

If you find yourself stressed and trying to imagine what life would be like without all the letters and calls, call us at 310-PLAN and let us help you negotiate a payment plan with your creditors.  My name is Wendy Young and I work in our Hamilton and Burlington offices, give me a call or send me an e-mail.

If you are considering a consumer proposal elsewhere in Canada, more information can be found at www.consumer-proposals.org.

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