An option that is available to many people who are dealing with debt issues is a consumer proposal. This is a situation where a person makes an offer to all of his or her unsecured creditors to pay them less than the total amount owing. This proposal is paid through a series of payments over a predetermined amount of time. Once the payments have been made and the person has fulfilled his or her duties, the remaining outstanding debt is discharged. Filing a consumer proposal in Ontario is an option for those who are able to pay back a portion of their debts, but not the entire amount. The process of filing consumer proposal in Ontario is done with a trustee in bankruptcy. Despite having the word “bankruptcy” in their name, trustees in bankruptcy aren’t just used to file for bankruptcy. They are able to administer proposals as well. Financial advisors, debt settlement companies and other such individuals are not able to do so.
The Consumer Proposal Process
The process starts with a free consultation. You will meet with a trustee and he or she will review your financial situation. The trustee will then inform you on the options that are available to you to help you improve your debt situation. Depending on your particular circumstances, one option may be filing a consumer proposal. The option you choose is entirely up to you. A Licensed Insolvency Trustee is not there to push you into one option or another. He or she is there to ensure that you understand the options available, that you know what each process entails and that the entire process is carried out fairly.
If your choice is filing consumer proposal in Ontario, the trustee will determine what a fair offer to your creditors will be. This will depend on your unique situation. An experienced trustee will be able to look at your assets, your income and your debt and create an offer that will be fair to both you and your unsecured creditors. This will increase the likelihood of your creditors accepting the proposal. The trustee will work with you to complete the required forms and file your proposal with the Office of the Superintendent of Bankruptcy. Your creditors will then have 45 days to decide whether or not they would like to accept your offer. A meeting of creditors may be called. This will depend on your situation, but these meetings are becoming rarer. If the majority of your creditors decide to accept the proposal, then all are bound by its terms. Once your proposal has been accepted, any legal actions against you will stop as will any wage garnishments. Your Licensed Insolvency Trustee will be responsible for all communication with your unsecured creditors and no collection agencies will be able to contact you. Creditors will not be legally able to take any other steps to complete their debts.
Your Responsibilities with a Consumer Proposal
Your duties include making the agreed upon payments each month. It is important that you make these payments on time regularly. If you miss a total of three payments, your proposal can be annulled. Your payments will be made to your Licensed Insolvency Trustee who will distribute them to your creditors. As a part of filing for consumer proposal in Ontario, you will also need to attend two financial counselling sessions. These sessions are designed to teach you budgeting, money management and financial tips that will assist you going forward. It is also your responsibility to provided updated contact information to your trustee and inform him or her if you change jobs or get a new address or phone number.
After Consumer Proposal
Once you have made all of the agreed upon payments and, as long as you have fulfilled your other duties as well, your trustee will sign off on your Certificate of Full Performance, completing your proposal. Then you will be able to start the process of rebuilding your financial life. If you are thinking about filing consumer proposal in Ontario, you will want to speak with a Licensed Insolvency Trustee. Not only will the trustee be required in order to file, but he or she will also be able to explain the options available to you and answer any questions you may have.