Consumer Proposal- A Solution To Personal Bankruptcy
An absolute way to significantly reduce your debts and to avoid bankruptcy in Toronto is to file a consumer proposal. This is an offer you make to your unsecured creditors to pay them a portion of the total amount you owe them within a maximum period of five years. It offers an alternative to personal bankruptcy with full legal protection against loss of your assets and the activity of Collection Agencies. A consumer proposal is handled by licenced Proposal Administrator who first assesses your financial situation to ascertain whether you qualify for this type of debt solution. Filing a Consumer proposal in Toronto is a legal process governed under the Bankruptcy and Insolvency Act of Canada.
The Role Of The Insolvency Trustee
To prepare the proposal, the Proposal Administrator or trustee works with you to determine a monthly payment over a period of up to 60 months, that you could realistically afford to offer your creditors in full settlement of what you owe them after taking into account reasonable living expenses. This amount becomes the basis of your proposal that is presented to your creditors. Because the creditors understand that the Proposal Administrator, who is licensed by the government, was intimately involved in reviewing your specific circumstances that resulted in the proposed payment, in the vast majority of cases these proposals are accepted. The reduction in some cases can be significant, ranging from 40% to as high as 80% of the original debt.
The creditors have a maximum of 45 days to reject or accept the proposal. If the proposal is accepted, the debtor will immediately start to make the monthly payments to the proposal administrator with both the debtor and the creditors bound to abide by its conditions. By accepting the proposal, the creditors agree to take an amount that is less what they are due rather than receive nothing at all which could happen if you were to declare bankruptcy. If the Proposal is rejected, then you will work with your Administrator to see if the amount you are offering can be increased, by cutting back on your living expenses.If so, a new offer of settlement is submitted
Why file a consumer proposal?
A consumer proposal has many benefits apart from being an alternative to bankruptcy to both the debtor and the creditors. These include:
- Your Proposal Administrator will handle all future dealings with your creditors. Neither they nor any collection agencies can harass you with ongoing threatening phone calls.
- No further interest payments. Interest on your credit cards is frozen the day you file your consumer proposal.
- Current wage garnishments are instantly stopped
- Most legal actions against you are stopped
- You get to keep most of your assets like your home and your car
- A consumer proposal Toronto is binding on most government debts like income taxes owing or unpaid GST/HST
- It is a legally binding procedure. It is supervised by the court and administered by a government licensed trustee.
All these advantages of filing a consumer proposal allow you to take back control of all your finances.For the privilege of having your debts reduced you are obliged to make regular monthly payments to your administrator to distribute it among the creditors. A consumer proposal in Toronto protects you against any further actions from your unsecured creditors: collection calls, asset seizures and legal actions. Filing a consumer proposal is therefore an excellent alternative for many residents of Toronto who have large debts and who are having difficulty repaying them. It allows you to avoid going bankrupt.