CONSUMER PROPOSALS

ADAMSON AND ASSOCIATES CAN HELP YOU!

Financial problems can be scary, but getting the wrong advice, from the wrong professional, can be even scarier.

Because people are scared by the word “bankruptcy”, they will do almost anything to avoid it. If you find yourself in this situation, always remember to seek the advice of a bankruptcy professional who can present you with other options, like a consumer proposal.

Sometimes, while attempting to avoid bankruptcy, people unknowingly worsen their financial situation by taking on high interest rate loans in the hopes of paying off current debts. This proves to be a short-term solution and only replaces one debt with another.

This is where Adamson & Associates can advise you of your best course of action in choosing either an Informal Proposal, a Consumer Proposal or a Division 1 Proposal in order to work your way to financial solvency.

Continue reading as we explain the three types of proposals in further detail. Should you wish to discuss this with John Adamson, contact us for a free, no-obligation consultation at 310-JOHN, through LIVE CHAT or use our on-line request to set up a no obligation appointment at your convenience.

 

TYPES OF PROPOSALS

INFORMAL, CONSUMER PROPOSAL & DIVISION 1 PROPOSAL

What is an Informal Proposal?

An Informal Proposal is the only type of Proposal that you do not need to work with a Licensed Insolvency Trustee for. You make a written offer to your creditors to pay some amount less than the full value of the debt. This type of creditor proposal usually does not work because there is no Stay of Proceedings that stops the creditors from taking collection action, legal action or garnishment of wages.

What is a Consumer Proposal?

A consumer proposal a legal proceeding administered under and governed by, The Bankruptcy and Insolvency Act (BIA) which is a highly effective tool that only Licensed Insolvency Trustees use as an alternative to bankruptcy. The Trustee will negotiate a reduction of your debt and a debt repayment plan that the bankruptcy Court, your creditors and you agree to. To qualify to file a consumer proposal you must meet the following:

  1. Your debts must be between $1,000 and $250,000, not including mortgages on principal residence;
  2. You must be insolvent i.e. your debts exceed your asset values; and
  3. You must be an individual that resides in or carries on business in Canada.

What is a Division 1 Proposal?

A Division 1 Proposal a legal proceeding administered under and governed by, The Bankruptcy and Insolvency Act (BIA) which is a highly effective tool that only Licensed Insolvency Trustees use as an alternative to bankruptcy. This proposal can be filed by an individual or a corporation. This is not a recommended course of action for an individual if they qualify to use a consumer proposal. Under this option, if you default on your proposal terms or, if the creditors vote against the proposal, you are automatically deemed bankrupt. To qualify to file a Division 1 proposal you must meet the following:

  1. Your debts must exceed $250,000;
  2. You must be insolvent i.e. your debts exceed your asset values; and
  3. You must be an individual or a corporation that resides in or carries on business in Canada.

THE ULTIMATE GOAL – DISCHARGE

Upon all of your required payments being made, a Certificate of Full Performance will be issued and you or your corporation will be discharged.

ADVANTAGES OF PROPOSALS

  • Where, with some professional assistance, the business can once again be profitable, or a portion of the business can be profitable if the business is restructured and a portion of the debt retired;
  • Where the insolvent desires a “certain” result or a quick resolution and is prepared to pay a premium to achieve that result;
  • Where a discharge is likely to be contentious or a substantial condition is likely to be imposed;
  • Where the insolvent person or corporation finds bankruptcy unacceptable;
  • Where the insolvent person or corporation wishes to continue in business and will be prevented in doing so if obliged to disclose that he is a bankrupt when dealing with third parties;
  • Where a professional accreditation may be lost or put at risk by a bankruptcy;
  • Where a bankruptcy will result in a secured creditor acting on its security; and
  • Where the insolvent has previously been bankrupt.

Day or evening, we are open late to help you. Call us now at 519-310-5646