A consumer proposal is a very effective way to avoid bankruptcy and negotiate a settlement with your creditors. Payments are generally overtime at less than full payout as long as more than 50% of your creditors agree.
A consumer proposal can be a much better and more manageable solution than bankruptcy to resolve your debts. To help determine if a consumer proposal is worth it for your situation you will need to provide certain information.
For a Licensed Insolvency Trustee (previously known as a Bankruptcy Trustee) to evaluate your financial situation and the best option for you to deal with your debts, the Trustee will need the following information:
List of your debts; both unsecured and secured debts.
List of your assets; the Trustee needs these details to determine which assets are exempt from seizure in a bankruptcy or consumer proposal, exempt assets can vary between New Brunswick, Nova Scotia and Prince Edward Island.
Details of household income; the Trustee needs these details to calculate if you have surplus income, and what you would be required to pay in bankruptcy as this is factored into a consumer proposal.
The number of people in your household, do you have a spouse and children?
If you have ever filed a personal bankruptcy before.
Here are just a few advantages of filing a consumer proposal versus personal bankruptcy.
• You want to pay your creditors more than they would get in a bankruptcy.
• You have a high income and could not manage the surplus income payment required in a bankruptcy.
• You have equity in assets that would take too long to pay within a bankruptcy.
• You have been bankrupt previously.
• You want to take advantage of a potentially shorter impact on your credit score.
You can be as creative as you want in determining the terms of a settlement put forth in a consumer proposal as long as it is fair and reasonable and you can get more than 50% of your unsecured creditors (by dollar-value of claims) to accept it. As long as you get over this 50% threshold, it will be binding on all unsecured creditors whether they like it or not.
Most consumer proposals are structured as monthly payments over time at less than the full amount owed. Generally, a consumer proposal should provide a higher return or recovery to the creditors than they would obtain in bankruptcy or there is no incentive for your creditors to vote in favour of it. Once the total amount of the settlement is determined and approved, you can pay it out early if you are able to do so and this would accelerate rebuilding your credit.
You Have Options
In order to qualify to file a consumer proposal, you must have debts of less than $250,000, excluding the mortgage on your principal residence. If you are over this limit, there is another form of a proposal that can be filed.
When we review your individual situation, we will consider whether or not a consumer proposal (or another form of a proposal) makes sense for you and review the pros and cons of a proposal as compared to bankruptcy and other non-legislated options.
Good to know! The fact that you filed a Consumer Proposal will stay on your credit bureau report for 3 years after you have completed all of the terms of your Proposal or 6 years from the date of filing, whichever comes first.
Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of major financial stress;
You won’t be stuck in an assembly line process.
You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.
We will review your debt solution options, including filing a consumer proposal or personal bankruptcy.
We help Canadians with overwhelming debt get fresh financial starts.
Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.
We offer free consultations to review your financial situation and practical debt resolution options. Contact us to discuss your situation over the phone, a video chat, or in-person in Saint John, Moncton, Fredericton, Charlottetown, Dartmouth, or Miramichi.