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A Consumer Proposal gives you a way to adjust payments to your creditors, by reducing the amount you have to pay back and extending the time period of paying by generally 5 years or less, with no interest payments.
Not only do you settle your debt obligations and avoid bankruptcy, but all other actions from your creditors are stopped once the Consumer Proposal is filed. Imagine no more harassing phone calls and no more wage garnishment or any kind of court actions.
A consumer proposal can consolidate mostly unsecured debts such as:
- Credit cards, Personal lines of credit and Bank overdrafts.
- Personal loans and Payday loan advances.
- Personal Income tax, Source deductions and GST debt with Revenue Canada.
- Student loan both Federal and Provincial (pertaining to condition, you’ve been out of school for 7 years from the date you last attended school).
- Debts resulting out of any Re-possessed car or house, shortfalls can be included.
- Debts sold to collection agencies such as phones bills or other service related debt.
Any natural person who is insolvent, including a bankrupt, whose debts do not exceed $250,000, excluding a mortgage for the person principal residence, can make a consumer proposal. When a person wishes to file a proposal, the proposal must first be approved by the inspectors and must have obtained the assistance of a trustee who will be the administrator of the consumer proposal. If the person debts exceed $250,000, the proposal will be made under Division I of Part III of the Act. It is also possible to make a joint consumer proposal. Two or more consumer proposals may be joined where they could reasonably be dealt with as one proposal because of the financial relationship of the consumer debtors involved. It must be emphasized that joint consumer proposals can be made only if the total debt of all the consumer debtors does not exceed $500,000.
Within 10 days after filing your proposal with the Official Receiver, the administrator is required to send the Official Receiver a report. The report contains the administrator opinion about whether the proposal is fair and reasonable, and whether he or she believes you will be able to perform it. It also contains a list of your creditors. At the same time, the administrator must send a copy of your proposal and the administrator report to each of your creditors.
Your creditors will have up to 45 days to consider whether to accept or reject your proposal. A creditor may send a notice to the administrator accepting or rejecting the proposal. If creditors do not respond, they will be considered to have accepted the proposal. If a sufficient number of creditors accept the proposal, then it will be a legal binding contract on your creditors and you will have to meet its terms.
Yes. There is a filing fee to be paid to the Superintendent of Bankruptcy. In addition, the administrator is entitled to be paid.