Do you have consumer proposal questions? Then browse through our FAQ for everything you need to know. The following list will help to answer your questions about what is a proposal and what happens during the three types of proposals: Informal Proposal, Consumer Proposal and Division 1 Proposal.
We hope the following information will help you to better understand Consumer Proposals. Adamson & Associates, Licensed Insolvency Trustee can be contacted for further information call 519-310-JOHN (5646), contact us through live chat or complete the online request for your free, no-obligation consultation.
A person or company to whom you owe money.
Anyone who owes money to a person or a company for something they purchased.
There is a set fee schedule for a Consumer Proposal that all Trustees must follow outlined in the Bankruptcy and Insolvency Act. The fee is a percentage of the amount of debt you repay to your creditors. This fee is included in the monthly payments that Adamson & Associates negotiate with your creditors.
For example, if you are required to repay the creditors $10,000 over 50 months and the Trustee’s fee is 20% of the $10,000, you would make monthly payments of $200. $160 per month would go to the creditors and the balance of $40 per month would go to the Trustee.
There are times when a proposal may be a better option than filing for bankruptcy. However, this is not always the case and a Trustee is the best professional to advise you regarding your specific situation.
Some of the advantages of a proposal include a better credit rating, the ability to earn more income without sharing it with the creditors, and having the certainty of knowing what your monthly payment will be should your income fluctuate.
We generally structure our proposals so that you are free to pay them off early.
Once your payment plan has been accepted, the payments will not change if your income increases, which is a substantial advantage to a proposal over a bankruptcy. However, if there was a significant decrease in your income, we can ask the creditors to reduce your payments based upon the change in your situation.
Unlike in a bankruptcy, you are free to deal with your assets and property during your proposal as you would normally.
Yes, in most situations, Canada Revenue Agency (“CRA”) is considered an unsecured creditor and can be included in your proposal. In situations where you may be operating a business, there are some CRA debts that must be dealt with differently. You should discuss your situation with the Trustee who will explain in detail any of these unique CRA debts.
Yes, a person may have debts that are commercial in nature, and these debts may be included. You should discuss your business details with the Trustee who can provide you with specifics as they relate to your unique situation.
No, there is no requirement under the Bankruptcy and Insolvency Act to put your name in the newspaper if you file a consumer proposal.
A proposal will not change your obligation to make support payments.
It is generally recommended that a person maintain an account at an institution where they have no other debts.
Only a licensed Trustee in Bankruptcy can assist you through the proposal process.
No, as long as creditors holding 50.1% or more of the total value of your debts agree to the proposal the proposal will be approved.
For example, you have three creditors. Creditor A is owed $5,000, Creditor B is owed $4,000 and Creditor C is owed $2,000. Total value of your debts equals $11,000. You must have 50.1% of the $11,000 accept the proposal or $5,501. Therefore, it will take any two creditors to agree to the proposal to have it accepted.
A proposal is for settling your debts with unsecured creditors. Secured creditors will still have to be paid or they have the option to seize the asset.
If you have a co-signer, that person will be responsible for the entire amount of the debt they co-signed, if you don’t pay the debt.
The more you offer your creditors, the more likely it is that they will accept the proposal. However, the more you offer your creditors the more likely it is that you will be unsuccessful in being able to complete the proposal should you have an unexpected change in your situation, such as a temporary layoff. Therefore, the key is to find the appropriate balance.
In our experience, we believe that demonstrating to the creditors that your proposal will offer the creditors more money than they would expect to receive under a bankruptcy scenario, will likely result in your proposal being successful.
An employee may not be dismissed for making a consumer proposal. If you are bonded, handle cash or are a broker, a proposal may be a better alternative to bankruptcy.
Unlike a bankruptcy, tax refunds are not property available for distribution to creditors in a proposal.
If you are planning on moving out of your apartment, the landlord would become a creditor in your proposal if you owe any back rent. If you are not planning on moving out, you will be instructed to pay your back rent as soon as possible or your landlord can evict you for non-payment of rent. However, your landlord can not evict you simply because you have filed a proposal.
If you have any unpaid utilities such as telephone, gas, electricity or water, these companies cannot disconnect your service because you filed a proposal. However, the service company has the right to deny future credit and could ask for cash or certified payments.
Your proposal only deals with unsecured creditors therefore, you keep all your assets. If you have pledged any assets as collateral against debt, it makes that debt secured and you are responsible to continue your payments if you are choosing to keep the asset.