How do I know if I qualify for a Consumer Proposal?
If your debt is at least $1,000, but less than $250,000 (excluding your mortgage) and you haven’t filed another Consumer Proposal recently (or a Division I Proposal/Notice of Intention) you should qualify. If your debt is more than $250,000 you may consider filing a Division I Proposal.
What do I need to do to file?
Step 1: Contact us to discuss your options.
Step 2: Prepare your financial documents for us to review so we can prepare the paperwork.
Step 3: Meet with one of our Trustees to review your situation and decide what your best option is.
Step 4: Sign the proposal documents and ask your Trustee to file them with the Federal Government.
How long does it take?
Not more than 60 months. A proposal can be a lump sum, payments over a period of time, or a combination of the two. We always make sure your proposal contains a term that you can pay it off early if your circumstances change for the better.
What happens if I can’t make my payments?
If you miss more than three monthly payments your proposal will be in default. If you can’t make a payment you should contact us immediately to make arrangements to avoid the proposal going into default. Default means that the stay of proceedings is lifted and your creditors can start collection actions against you again.
Can I keep my home? What about my car?
You get to keep all your assets in a Consumer Proposal if you wish, but if you want to keep secured assets you will need to keep making those payments. Some people may choose to return leased assets they can’t afford at the time of filing so that those debts can be included in their proposal.
What happens to my spouse if I file a Consumer Proposal?
Your spouse will not be affected by you filing a Consumer Proposal if they are not co-signers or guarantors of your debt. If they are, it may be appropriate to file a joint proposal which can include both of your unsecured debts.
What does a Consumer Proposal cost?
The Trustee’s fees come from the money you pay into the proposal, no additional costs are required. Trustee fees in Consumer Proposals are set by the government and are the same no matter which Trustee you decide to use. We will work with you to arrange a proposal payment plan that is fair and within your budget.
What happens if my creditors don’t accept my Consumer Proposal?
You are in no worse position than you were before filing. You are not bankrupt, but have the option of filing for bankruptcy if you think that is the best option for you at that time.
What happens to my credit rating?
Filing a proposal will give you a credit rating of R7, which is not as bad as a bankruptcy, which is an R9. The R7 rating is removed three years after you complete your proposal.
Can I keep my credit cards?
The Trustee will keep any credit cards that are part of your proposal. If you have a credit card with no balance that is not part of your proposal you may keep it.
How do I rebuild my credit?
As part of the proposal process you are required to attend two counselling sessions, the second is focused on helping you plan your financial future and will explain how you can re-establish credit.
The Legal Stuff
Is the Trustee my lawyer?
No. Trustees are not lawyers, they are impartial officers of the court with a duty to administer the bankruptcy and proposal system fairly and honestly. We are regulated by the Office of the Superintendent of Bankruptcy.
Do I need a lawyer?
Usually not. If we feel that you have a complicated situation where you may need legal assistance we may refer you to a lawyer to get advice.
Are my discussions with my Trustee confidential?
We do not discuss your initial consultations before filing bankruptcy or a proposal with anyone.
If you do choose to file with us, we will have a duty to disclose anything you have told us in those meetings that is material to your filing, and will not be able to ignore it.
What legal aspects of bankruptcy or proposals do I need to understand?
the law requires that people signing up for bankruptcies and proposals understand their legal responsibilities. Your Trustee will give you certain excerpts of the Bankruptcy and Insolvency Act to review and will have you sign a document attesting that you understand your responsibilities before signing the filing documents. These sections of the Bankruptcy and Insolvency Act are here:
- Duties of Bankrupts – Section 158
- Property of Bankruptcy – Section 67(1)
- Directives re surplus income – Section 68
- Facts for which discharge may be refused, suspended or granted conditionally – Section 173
- Debts not released by Order of Discharge – Section 178
- Bankruptcy Offences – Section 198
- Failure to Disclose Fact of Being an Undischarged Bankrupt – Section 199
- Bankruptcy Failing to Keep Proper Books of Account – Section 200
Don’t hesitate to ask your Trustee for clarification on any of these requirements before signing, we will be happy to take the time to make sure you understand them.