What you Need to Know about Ontario Consumer Proposals
A consumer proposal is a way to find debt relief. Consumer proposals are legal processes that help people pay a portion of their debt and have the remaining unsecured debt discharged. If you are experiencing financial difficulty, you may wish to consider filing a consumer proposal in Ontario.
When you’re having financial trouble, it’s tough to know where to turn. Dealing with high amounts of debt is stressful. You might find yourself losing sleep over whether or not you can pay your bills. You may end up dealing with creditors and harassing phone calls. It may feel like you have no options. This isn’t true. When you are in financial trouble, there are steps that you can take to stop creditors from calling and eventually eliminate your debt. One of these options is a consumer proposal.
Speaking with a trustee in bankruptcy can help you understand the financial options that are available to you and help you make an informed choice about your financial future.
Despite having the word “bankruptcy” in the name, a trustee isn’t just there to help you file for bankruptcy. Bankruptcy trustees are trained, registered and regulated. They are able to review financial situations and help people understand the options that are available to them. In some cases, one of the available options is a consumer proposal. Ontario residents, like those who reside anywhere in Canada, are able to use this legal process to improve their debt situation.
What is a consumer proposal? It is a situation where a person makes an offer to his or her unsecured creditors to pay less than the overall amount owing over a period of time. Once this amount has been paid and the debtor has met all of his or her duties, the remaining unpaid debt is considered forgiven.
A consumer proposal can be a solution for Ontario residents who are able to pay a portion of the debt they owe, but who are unable to handle paying back the full amount.
Why Creditors often Accept Consumer Proposals in Ontario
You may be wondering why your creditors would be willing to accept less than is owed to them. At first, this may not make very much sense. However, the reason is that creditors would rather get something than nothing.
In general, if a person is speaking to a trustee in bankruptcy and filing a consumer proposal, that person is unable to pay his or her debts in full. When the trustee reviews the person’s financial situation, he or she determines what the person’s creditors would likely get in a bankruptcy. The trustee also determines what a fair offer to the creditors would be. In most cases, the offer is greater than what the creditors would receive in a bankruptcy. For this reason, the majority of Ontario consumer proposals are accepted by creditors. They know that, if the proposal is rejected, the debtor will likely consider filing for bankruptcy. Therefore, creditors are willing to accept less than the full amount owing, since it will most likely be more than they would get in a bankruptcy situation.
Filing a Consumer Proposal, Ontario and Across Canada
Once you’ve spoken to a trustee and heard your options, you may make the decision to file a consumer proposal. If you do, you will need to provide the trustee with information on your income as well as details on all of your assets and debts. This will allow the trustee to prepare a fair offer to your creditors based on your financial situation.
It’s important to note that a consumer proposal can only include unsecured debts. These are debts such as credit cards, unsecured lines of credit, personal loans and other such debt. Loans like mortgages and automobile loans cannot be included. If you are having difficulty paying these debts, you will need to speak with these lenders individually.
Once the proposal is prepared and sent to your unsecured creditors, they have 45 days to vote on it. If the majority of your creditors choose to accept the proposal, then all are bound by its terms.
You will then be responsible for making the monthly payments outlined in the proposal. The payments will be made to the trustee, who will then distribute them to your creditors. It is important that you make these payments as they become due. Missing three payments can result in your proposal being annulled. Once you have made all of the required payments, your consumer proposal will be complete, you will be discharged and your remaining unsecured debts will be eliminated.
If you are having financial trouble, you may wish to consider a consumer proposal. Ontario bankruptcy trustees can help.