Our solutions to become debt-free
Consumer Proposal
This type of solution is restricted to individuals whose total debt, excluding mortgage debt related to their family residence, does not exceed $ 250,000. If the total debt exceeds $ 250,000, individuals can still file another type of proposal, but the rules related thereto will differ somewhat.
It is important to note that this procedure must be carried out under the supervision of your trustee who sees to the negotiations with your creditors and protects you against any legal action. In addition, this solution has the advantage of allowing you to keep all your assets such as your car, your house and your furniture.
What is a proposal
The proposal is a settlement offer made to all your creditors except those who hold collateral or liens on your property (e.g. mortgage, installment sales contract, lease agreement). The amount of money offered in your proposal is payable over a certain number of months that varies from one to sixty months, all without any interest. You can thus not only reduce the total amount of your debts but also the monthly amount you currently pay.
Role of your trustee
Following an evaluation of your financial situation by the trustee, he will discuss with you the amount that could be offered as part of your proposal. This suggestion will be made taking into account your budget and the net value of your assets. Once this is filed, your trustee will act as an intermediary between you and your creditors and will handle all communications and negotiations with them. The proposal can be formulated in many ways. In certain circumstances, the proposal will provide for monthly payments over a period not exceeding five years, while in other situations, a single payment may be offered.
The trustee then forwards your proposal to creditors along with a report on his recommendations and on the fairness and viability of the proposal. Upon filing, the creditors have 45 days to study and make their decision known.
And then...
Once accepted by a majority of creditors (50% plus one, $ 1 = 1 vote), the proposal binds all unsecured creditors, even those who voted against it.
The money needed to pay the proposal is paid to us and thereafter distributed to your creditors. If creditors vote against your proposal, it is still possible for us to negotiate with them. If no agreement is possible, you are not in bankruptcy. The proposal ceases to be in force and you regain the status that you had before the filing.
If your proposal is accepted and ratified, you will begin to make the payments under the proposal. Note that you cannot be more than three months late, otherwise your proposal will automatically be annulled.
When the terms and conditions related to your proposal have been fully complied with, we will issue a certificate certifying compliance with the agreement made in the proposal, and you will be freed from all the debts originally covered under the proposal, subject to certain provisions under Article 178 of the Act (e.g.: child support, fraud, misrepresentation, student loans if less than 7 years old).
This solution allows a person with sufficient income to make the necessary adjustments to his debt situation while acting responsibly. With this alternative, your credit rating will be less affected (a rating of R-7 at the proposal's conclusion for a period of three years following the end of your proposal, rather than R-9). Creditors will thus be more inclined to appreciate the efforts you have made. You will have kept all your property, and with this experience you will certainly have developed sound financial and budgetary practices. If you ever face other financial problems in the future, and you are forced into bankruptcy, you will not have the negative consequences of a second bankruptcy.
Debt problems are becoming more frequent. By thus amending the Act, Parlement wanted to allow more people to be free of these problems, without necessarily having recourse to bankruptcy.
If you have the means to make reasonable payments, this solution should be strongly considered.
Effects of a proposal
In addition, the Act provides that the filing of a proposal shall have the effect of:
- Suspending legal proceedings against you.
- Prohibiting the termination or modification of a contract with you just because you are insolvent or have filed a consumer proposal.
- Prohibiting a creditor from invoking a clause forfeiting the benefit of the term solely because the debtor is insolvent or has filed a consumer proposal.
- Prohibiting a public utility from discontinuing service.
- Prohibiting an employer from dismissing, suspending or laying off the debtor-consumer solely because he is insolvent or has filed a consumer proposal.
- Allowing you to keep all your belongings.
Testimonial
Here's how Julie and Philip solved their debt problems with a consumer proposal:
"Our monthly payments were almost $ 975 per month, excluding our mortgage payment. We were at the end of our rope and beginning to accumulate serious arrears. The agreement arrived at by our trustee with our creditors allowed us reduce our total debt from $ 35,000 to $ 14,400, payable in 48 payments of $ 300, all without interest. And the best news is that we kept our house and our car."
This solution allows a person with sufficient income to make the necessary adjustments to his debt situation while acting responsibly. With this alternative, your credit rating will be less affected (a rating of R-9 during the proposal but R-7 at the proposal's conclusion for a period of three years following the end of your proposal). Creditors will thus be more inclined to appreciate the efforts you have made. You will have kept all your property, and with this experience you will certainly have developed sound financial and budgetary practices. If you ever face other financial problems in the future, and you are forced into bankruptcy, you will not have the negative consequences of a second bankruptcy.
Debt problems are becoming more frequent. By thus amending the Act, Parliament wanted to allow more people to be free of these problems, without necessarily having recourse to bankruptcy.
If it proves feasible, this solution should be strongly considered.
See other solutions