Why Choose a Consumer Proposal?
Consumer proposals are one of the most common methods used by Canadians to consolidate their debt, outside of a consolidation loan.
A consumer proposal is a federally legislated debt repayment program
that will see all of your debt combined into one payment and can often
reduce the amount that you have to pay back. It’s one of the most
popular repayment methods because of the fact that it is federally
regulated by the Bankruptcy & Insolvency Act. Now don’t be scared by
that statement. In no way are you filing for bankruptcy when you file a
consumer proposal. They are two completely different repayment
proposals.
Other than Bankruptcy no other program in Canada has as high of a success rate and Consumer
proposals can handle almost any type of account. Loans, credit cards,
payday loans, lines of credit, Canada Revenue Agency, they can all be
included. You can protect yourself from wage garnishments, collection
activity, judgments, you name it. A consumer proposal can take the
stress away.
What happens in a Consumer Proposal?
Consumer proposals can often be confusing and seem scary but the
reality is, they’re pretty straight forward when you know what happens.
First, you need to contact a licensed insolvency trustee to file a
proposal. Don’t get fooled by other institutions that claim they can
file it for you. They do nothing more than collect documents and pass
you onto a licensed insolvency trustee, after charging you extremely
high retainers of course. You should never pay a firm thousands of
dollars in upfront fees to file a consumer proposal.
Upon signing with a licensed insolvency trustee they will file the
proposal with the superintendents office and send it out to your
creditors. As soon as the proposal has been filed your creditors are
given 45 calendar days to review and respond to the proposal. Typically
there are three responses from your creditors. One, they accept the
proposal and everything moves along as planned. Two, they decline the
proposal (not very likely) and finally, they can decline the proposal
and offer a counter offer. In any case, a proposal will pass if you can
get 50% of the dollars owed to accept plus one dollar. Essentially
making it a majority rules situation. You can run into a situation where
some creditors decline but are forced to go along with it if the
majority of the votes were a yes.
Once the proposal has passed you have 60 months (5 years) or less to
complete your payments at which time the proposal is deemed completed.
What is the success rate of a Consumer Proposal?
One word, HIGH. Outside of Bankruptcy there
is no other debt repayment program that can match the success rate of a
consumer proposal. According to Stats Can. a staggering 98% of consumer
proposals are accepted leaving only 2% that are not successful. This is
one of the biggest factors for consumers when they are contemplating
their options. Simply put, it’s very rare that a consumer proposal is
declined.
Who can offer a Consumer Proposal?
Ultimately, as stated above, the only professionals that have the
ability to file a consumer proposal are Licensed Insolvency Trustees.
Anyone other than a Licensed Insolvency Trustees cannot file a proposal
for you. There are plenty of institutions that state they will help you
through the process of a proposal but they often charge thousand of
dollars in upfront fees. These institutions try to justify their
retainers but at the end of the day they are simply charging large
upfront fees to collect documents and pass then onto a Licensed
Insolvency Trustees.
Do you have to pay an upfront fee for a Consumer Proposal?
No, a Licensed Insolvency Trustee will never charge you an upfront
fee to file a consumer proposal. If the institution you are working with
asks you to pay thousands of dollars in upfront fees stop working with
them.