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Debt Education Centre

Debt Education Centre

We believe that a well informed client is the best type of client to have. To that end we have put together a series of videos dealing with issues around debt management, financial stress and the various options open to individuals to solve their debt problems.

We hope that you will find these FAQs informative, whether you are thinking about debt consolidation, a Consumer Proposal, or a Bankruptcy.


Frequently asked questions about a Consumer Proposal

Hello. I’m Andy Fisher. I’m a partner with A. Farber and Partners. We are federally licensed Administrators for Consumer Proposals. I have with me Saud and Drew. They have a number of questions that we frequently get asked about a Consumer Proposal. I hope that by answering these questions, you get a better understanding about a Consumer Proposal or a Bankruptcy works.

  1. Do all of my creditors have to agree to my Consumer Proposal?
    No. If a simple majority accepts the proposal, it is legal binding on all of your creditors. In other forms of debt settlements, you usually have to deal with each creditor separately. This is time consuming and unless they all agree you may not be able to fully reduce or eliminate your debts
  2. Why would creditors accept my Consumer Proposal that will significantly reduce my debts?
    The creditors will see that you don’t have the assets that you can sell to pay your debts in full. They are going to see that you do not have the cash flow to pay your debts in full. As long as a Consumer Proposal offers the creditors more then they would receive in a Bankruptcy, and as long it offers a certain percentage of your debts – usually around 30% – then generally the creditors will accept your Consumer Proposal.
  3. Do I have to pay any interest?
    No. There is no interest on your payments.
  4. What about fees… How much will this cost?
    There are no additional fees or costs to file a Consumer Proposal. Your first consultation is free and once the proposal has been filed and accepted, the costs are included in the one monthly payment that you make.
  5. Will my creditors be able to garnish my wages or seize any of my assets?
    No.  A Consumer Proposal will stop any legal action and it will protect your assets. You can keep your house, vehicle and all of your assets.
  6. How will my privacy be protected… Will my family and my employer find out about this?
    The fact that you have filed a Consumer Proposal will not be advertised and will not be published in a newspaper. The only people who are notified are your creditors, Canada Revenue Agency and the government agency that regulates the process.
  7. I’ve heard that in these situations I may have to go to court.
    No, you do not have to appear in court and in fact once you file your Consumer Proposal with A. Farber & Partners, we will deal with your creditors. All you need to do is to make your monthly proposal payments.
  8. I’ve heard advertisements from Debt Counselors offering the same kind of option. Why would I not consider them?
    A Consumer Proposal is governed by Federal Law. Under this law only a federally Licensed Administrator to a Consumer Proposal Administrator, such as A. Farber & Partners, can offer a Consumer Proposal. So Accountants, Lawyers, Credit Counselors and Debt Consultants cannot offer you this option.
  9. What about the impact on my credit score?
    A Consumer Proposal is on record with the credit bureau for 3 years after it is completed. But for most people, unless they are going to win the lottery, it is the fastest way to improve their credit and become debt free.

So let’s summarize what we’ve learned. If you’re in financial difficulty, come to see A. Farber & Partners. We will review your situation to determine whether a Consumer Proposal is the right solution for you. If it is, once you’ve signed the paperwork you’ll get the relief from your creditors that you are looking for. You will normally pay off about 30% of your total debts. Then you can start the process of rebuilding your financial future (and we can help you with that, too). Apply now for your free, no obligation consultation.


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Your RRSP is one of your most valuable assets


Think about it for a moment: when you reach retirement – whether that is in 10 years or 30 years – it the one asset that you are going to rely on to care for you and your spouse.

Often when people find themselves in financial difficulty, they think about cashing in their RRSPs to try to deal with their debts. For most people, this is the wrong decision.

Many people we see have cashed a portion or all of their RRSPs, but they are still in financial difficulty. Under a Consumer Proposal or a Bankruptcy, you can protect your RRSP. Yes, even in a Bankruptcy, other then contributions in the last 12 months, your RRSP is protected.

At A. Farber & Partners, as part of our R-plan, we will listen to what you say, we will review your financial situation and develop a plan that saves your RRSP. So before you make a decision to cash your RRSP, give us a call at 310-1100(no need for the area code) or click here to apply for your free, no obligation consultation.


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The difference between a Consumer Proposal and a Bankruptcy

What is a Consumer Proposal?

Hello. I’m Andy Fisher. I’m a partner with A. Farber and Partners. We are licensed by the federal government to act as Administrators for Consumer Proposals. We have helped thousands of people deal with their debt. At your first no obligation, no cost initial consultation with our team, we will listen to what you have to say and draft a plan the fits your needs.

Today I’m going to talk to you about a Consumer Proposal. Let’s say that you’re someone who has incurred debts over the years to meet some of your expenses. You’ve used your credit card or taken out a loan to pay for car repairs, take a vacation or just to help manage your expenses through tough times. You’ve done your best to try and reduce the balances owing but after all these years you don’t seem to be making any progress. The interest charges are high and the amount owing has stayed more or less the same. If you continue along the same path nothing will change and you won’t make any progress in improving your financial situation.

A Consumer Proposal is an option that can provide you with financial relief by eliminating a substantial part of your debts. It is an option available to individuals who are not able to pay their debts in full, but can afford to pay some amount every month. Let me be clear – a Consumer Proposal is NOT a Bankruptcy. It is a legally binding agreement between you and your creditors to pay them a specific amount of money – usually around 30% of your original debt – over a fixed period of time.

Consumer Proposal Example

Let’s look at the example of Nichole and Mike. They owe a total of $46,000 on credit cards, and some income taxes. They both work and take home around $4,300/mth. But after mortgage payments, car payments and other living expense they are barely making their minimum credit card payments. This couple was able to eliminate their debts, including the income taxes, through a Consumer Proposal. The creditors accepted a proposal that would see Nichole and Mike reduce their $46,000 in debts to $15,000. They were able to accomplish this by paying their creditors $250/mth for 60 months. As with most Consumer Proposals, payments are usually made on a monthly basis, but it does not necessarily need to be set up that way. There are many creative ways to structure a Consumer Proposal.

The advantages of a Consumer Proposal

So, what are the advantages to you:

  • You will not lose your house, vehicle or RRSPs. All your assets are protected from your creditors.
  • There is no interest on the payments and there is no additional cost for the Administrator’s involvement.
  • Unlike an informal settlement, a Consumer Proposal does not require 100% acceptance by your creditors. If the majority of your creditors accept the proposal, it is legally binding to all of them.
  • A Consumer Proposal provides complete legal protection from your creditors. It will end the harassing phone calls. It stops wage garnishments and other legal actions that may have already been commenced against you. A Consumer Proposal also prevents legal actions from being started.

You need a Bankrupty Trustee

In Canada, a Consumer Proposal can only be filed with a federally licensed Administrator, such as A. Farber and Partners. A lawyer, accountant, credit counselor or debt counselor may be able to help you with advice, but they cannot file a Consumer Proposal. 

As part of A. Farber and Partner’s R-Plan, we will listen to your concerns. We will treat you with respect and we will review your situation to structure a Consumer Proposal that makes sense for you. You will be provided with relief from your creditors and the pressure you are feeling and we will help you rebuild your financial future. Click here to apply for your free, no obligation consultation.