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Consumer Proposals: Separating the Truth from the Myths

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    Consumer Proposal FactsWhile filing a consumer proposal in Ontario is quite common for those who are struggling with debt, there are a lot of myths that exist about this process. Many people are unsure of what a consumer proposal actually is and this makes it tough to decide if it’s the right process for you. Before you make any decisions regarding your financial life or your debt troubles, it’s important that you understand as much as possible about the options that are available to you. This is why, if you are dealing with debt and are unsure of how to resolve your debt issues, it is a good idea to speak with a financial professional about your situation. This will ensure that you understand what options are available to you to help you resolve your debt issues and that you are aware of the details of these options. Having this information will help you make an informed choice for your financial future. A trustee in bankruptcy is a trained, licensed and registered professional who is able to review your financial situation and provide you with details about the options that are available to you. A trustee in bankruptcy is licensed by the Office of the Superintendent of Bankruptcy to administer bankruptcy and consumer proposal estates. A bankruptcy trustee can also help you separate the facts about filing a consumer proposal in Ontario from the myths that often persist about this process.  

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    Consumer Proposal Ontario FAQ

    What is a consumer proposal?

    A consumer proposal is a legal process where you make an offer to your unsecured creditors to pay them on fixed payment terms that you can afford. In most cases, a consumer proposal sees you pay a portion of the debt that you owe to your unsecured creditors. These payments are typically made monthly over a set period of time (usually between one and five years). Once all payments have been made and you have fulfilled the duties as outlined by your trustee, the remaining outstanding debt is discharged.

    Do I lose all of my assets when I file a consumer proposal in Ontario?

    No. This is a myth that some people still believe. A consumer proposal does not typically include the sale of any of your assets. This means you will most likely be able to keep your home, your car, your personal belongings and your other assets as long as you keep your loan payments current. If you have excess equity in your home over the amount of your mortgage, this excess will be taken into account when your trustee determines the offer to your creditors.

    Can my creditors sue me or garnish my wages for filing a consumer proposal?

    Once you have filed a consumer proposal, you are legally protected from your creditors. All legal action and wage garnishments against you will stop. In addition, all communication with your creditors will be done by the trustee in bankruptcy. This means that your creditors cannot contact you to collect their funds and they cannot send a collection agency after you.

    Does every one of my unsecured creditors have to accept my proposal?

    No, this is another myth about filing a consumer proposal in Ontario. When you submit your proposal, your unsecured creditors have 45 days to decide whether or not they choose to accept it. If the majority of your unsecured creditors vote to accept your proposal, then all unsecured creditors are bound by its terms. The majority is determined by the total amount of the debt that is owed. This means that, if the unsecured creditors who are owed 50% plus one of the debt vote in favour of accepting the proposal, all must accept the terms.

    What happens if I can’t make my proposal payments?

    If your proposal is accepted by the majority of your unsecured creditors, you will be responsible for making the payments as outlined in the proposal. If you miss three payments, your proposal will be annulled. This means that your creditors will once again be free to take legal action against you for the full amount that you owe them. You may end up in a position where you need to file for bankruptcy if your proposal is annulled. When it comes to filing a consumer proposal in Ontario, knowing the facts is important. If you have any questions about consumer proposals or if you are unsure if this process is the right one for you, consider speaking with a trustee in bankruptcy.