Personal and Consumer Proposals to Creditors

Governed by the Bankruptcy and Insolvency Act, a Personal or Consumer Proposal allows a person to reschedule most of their debt payments in a more realistic way. If you are not able to pay all of your debts back, especially if interest continues to accrue, but are able to pay at least a portion of your debts back, then you are eligible to make a proposal to your creditors by offering to pay them at so much per month, WITHOUT INTEREST CONTINUING TO ACCRUE. If a majority of your creditors accept the proposal, and payments are made accordingly, you will be released from all debts included in the proposal.

Unsecured creditors will not be able to enforce any judgements or garnishment orders to recover their debts unless or until the proposal is rejected or annulled. That means if your creditors are GARNISHING your salary or bank accounts, then they would have to stop immediately if you file a proposal and the majority of your creditors accept it.

If you cannot meet payment obligations as they become due, and if all indebtedness is less than $75,000 (not including a mortgage on your principal residence) a Consumer Proposal is an option.

If your debts are above $75,000, or if the debts are related to a business, then please view our Division 1 Proposal page.

What if my spouse and I have the same debt?

If your and your spouse's debts are significantly similar, then you may be able to file one proposal. As the administrator of the proposal, Colleen Craig would have to believe that preparing only one proposal would be in the best interests of you and your creditors. Fees for a joint Consumer Proposal would be the same as if there had only been one person who had filed.

What is the cost of a consumer or personal proposal?

The following fees as outlined under the Bankruptcy and Insolvency Act (BIA), will be incorporated into your Consumer Proposal payments.

• $750 initial fees, payable upon filing a copy of the proposal with the Official Receiver.
• $750 payable on the approval by your creditors and The Court (usually 60 days after filing the proposal)
• Of the 20% of the money distributed to creditors under the Consumer Proposal, the Trustee takes a portion of the dividends paid to creditors. This is not an additional payment by the debtor.
• two mandatory counselling sessions fees - $85 each
• $50 filing fee
• GST where applicable

When and how is the proposal approved?

We would put a proposal together for you and send it to your creditors. The creditors have 45 days to look over the proposal and vote on whether or not they think that it is a good proposal and if they want to accept it (the creditors might request that a meeting be held to discuss the proposal in more detail). If a majority of the creditors who vote on the proposal accept the proposal within the 45-day period, then it is deemed accepted. If after another 15 days have elapsed, and no one has objected, then the proposal is deemed accepted by The Court and is BINDING ON ALL YOUR CREDITORS.

How do I deal with my creditors after the proposal is accepted?

After your proposal has been filed, your creditors should be dealing directly with us. If you are contacted directly by a creditor, you should refer them immediately to us to ensure that they have been made aware of the proposal and we can direct them as to their rights as creditors under the BIA.

What about creditors who are suing me?

The Court action is stopped once a proposal is filed. The creditor is treated like any other creditor in the proposal.

What if my wages are being garnished?

This is also a court action that will be stopped when your proposal is filed. The Trustee will notify the creditor and instruct your employer to cease the deduction from your wages.

Can I keep making payments on my car or mortgage?

You may either include your secured creditors in your proposal or make alternate arrangements with the creditor so that you may keep the asset. Usually you would be able to continue making your regular car or mortgage payments if you are able to make the monthly payments work within your personal budget. When making a proposal you are encouraged to look at all your debts and determine if it is in your best interest to continue to make these payments.

What if my financial circumstances change and I can no longer afford the payments?

The Trustee can ask your creditors to accept an amended proposal or the Trustee may have the proposal annulled. Your payments must always be an amount that you can afford.

What about utility companies?

A utility company cannot cut off service if a Consumer Proposal is filed even if you owe them at the time of filing. They could elect , however, not to supply further services unless an arrangement is made for payment for future services.

How is my credit rating affected?

A Consumer Proposal is usually a matter of record at a credit bureau. This information is available to credit grantors and may affect your ability to get credit in the future. However, if you have currently missed payments to your creditors or find yourself in collections already, this information is most likely already reflected on your credit rating. Filing a Consumer Proposal is generally reported on your credit rating for shorter period of time, and usually considered a better rating than if you file for bankruptcy.

What are my duties under a Consumer Proposal?

You must provide the Trustee with accurate financial information so that a realistic and feasible proposal may be filed on your behalf. You need to comply with the proposed payments or your proposal may be annulled. If your proposal is annulled, your creditors will have a claim against you for the amount owed to them, minus the payment received in the Proposal. Your creditors may be able to continue their legal actions against you.